RMD rules prevent pretax retirement money from remaining sheltered indefinitely. They do not require the account to be emptied at once, and the owner can generally withdraw more than the required minimum.
Key Takeaways
- Applicable age depends on birth date: SECURE 2.0 uses age 73 for many current retirees and age 75 for later cohorts.
- Traditional IRAs are covered: Owners must take lifetime RMDs once the applicable age is reached.
- Roth owners receive different treatment: Roth IRAs and designated Roth plan accounts generally have no lifetime RMD for the original owner.
- Beneficiary rules are separate: Inherited accounts can require distributions even when the original owner’s account did not.
When Do RMDs Begin?
Federal law defines an applicable age based on date of birth. Individuals who reach age 73 before 2033 fall under the age-73 rule, while later cohorts generally move to age 75.
Traditional IRA owners cannot use continued employment to postpone IRA RMDs. Some employer-plan participants can delay the plan’s RMD until retirement when statutory conditions are met, but that exception does not generally apply to a 5% owner.
Which Accounts Have RMDs?
| Account | Lifetime RMD for original owner? |
|---|---|
| Traditional IRA | Yes |
| SEP IRA | Yes |
| SIMPLE IRA | Yes |
| 401(k), 403(b), and many 457(b) accounts | Generally yes, subject to plan and employment rules |
| Roth IRA | Generally no |
| Designated Roth account in a 401(k) or 403(b) | Generally no for the original owner under current law |
How an RMD Is Calculated
For an IRA owner, the annual amount is generally calculated by dividing the prior year-end account balance by an IRS life-expectancy factor. Which IRS table applies depends on the owner and beneficiary circumstances.
That formula produces the minimum distribution for the year, not a recommended retirement-spending amount.
Can IRA RMDs Be Combined?
When a person owns multiple traditional IRAs, each IRA’s RMD is calculated separately, but the total required amount can generally be withdrawn from one or more of those IRAs.
Employer plans usually follow different aggregation rules. A 401(k) RMD generally cannot simply be satisfied by taking an equivalent amount from an IRA.
The First RMD Deadline
The first RMD can generally be delayed until April 1 of the year after the owner reaches the applicable beginning age. Later annual RMDs are generally due by December 31.
Delaying the first distribution means the first and second RMD can fall into the same calendar year. That can increase taxable income, so the delayed deadline is not automatically the best tax choice.
Are RMDs Taxable?
RMDs are generally included in taxable income except to the extent the distribution represents basis or another nontaxable amount. Qualified charitable distributions can satisfy qualifying IRA RMD amounts while following separate tax rules.
Required amounts are not eligible for rollover treatment for the year they must be distributed.
What Happens If an RMD Is Missed?
Failing to take the required amount can trigger an excise tax under federal law. The current penalty structure can allow a reduced rate when the shortfall is corrected within the applicable correction window.
Because penalty rules and correction procedures are technical, a missed RMD should be addressed promptly rather than carried forward informally.
Frequently Asked Questions (FAQs)
Do Roth IRAs have RMDs?
Not for the original owner during life under current law. Beneficiaries can still be subject to distribution requirements.
Can you take more than the RMD?
Yes. The RMD is a minimum, not a maximum withdrawal.
Can one IRA satisfy RMDs for several IRAs?
Generally yes for qualifying IRA aggregation, provided each IRA’s RMD is calculated and the total amount is distributed properly.