Key Takeaways
- A required minimum distribution is the smallest amount the IRS makes you pull each year from your tax-deferred accounts once you reach a certain age. For most retirees today that age is 73.1
- If you were born in 1960 or later, your age is 75. The first of those withdrawals comes due in 2035.2
- Roth IRAs have no required distributions while you’re alive.1 That’s one of their best features.
- Miss one and the penalty is 25% of what you should have taken, dropping to 10% if you fix it within two years.3
- Your first RMD is the smallest one you’ll ever take. The required percentage climbs with every birthday, which is why the planning years before 73 matter so much.
A required minimum distribution, or RMD, is the amount the IRS requires you to withdraw each year from your traditional IRA, 401(k), and similar tax-deferred accounts once you hit the required age. It’s taxed as ordinary income. Miss the deadline and the penalty is steep.
The good news is that almost every RMD problem is avoidable. Not by reacting well at 73, but by planning in the years before it.
What is an RMD, and why does it exist?
An RMD is the government collecting a bill you’ve been deferring for decades. You funded a 401(k) or traditional IRA with pretax dollars, the account grew untaxed, and at some point the IRS wants its share.
On our podcast I’ve described it this way: an RMD is a tool the IRS has to create a taxable event and generate tax revenue. It isn’t a penalty. It’s a deadline.
The rule exists so tax-deferred accounts don’t become permanent shelters that pass to heirs untouched. And it applies whether or not you need the money to live on. That’s the part that catches people. Plenty of retirees with a pension and Social Security don’t need a dollar from their IRA at 73, and take one anyway.
We covered this end to end in episode 21 of The Fiscal Physical Podcast, “Required Minimum Distributions (RMDs) Explained.”
At what age do RMDs start?
Age 73 for most people retiring today. Age 75 if you were born in 1960 or later.1,2
The rules moved twice in recent years, which is why there’s so much stale information floating around. Under the SECURE 2.0 Act, the starting age is 73 for people born from 1951 through 1959, and 75 for anyone born in 1960 or later.2
Here’s the timing, since it’s commonly reported wrong. Someone born in 1960 turns 73 in 2033, but they don’t have to take anything then. Their required age is 75, which they reach in 2035. So the first age-75 required distributions land in the 2035 tax year, not 2033.
So check your birth year rather than assuming 73. If you were born in 1959 you’re on the 73 track. Born in 1960, and you get two more years before the IRS asks for anything.
The April 1 choice, and why it’s usually a trap
You get one timing option, exactly once. Your first RMD can be delayed until April 1 of the year after you turn 73.1 Every RMD after that is due by December 31.
It sounds like a gift. It usually isn’t.
Say you turn 73 in 2026 with $800,000 in your traditional IRA as of December 31, 2025. Your first RMD is $800,000 divided by 26.5, which is $30,188.68.4 Take it in 2026 and it’s one year’s income.
Now delay it to March 2027 instead. What happens to your 2027 return?
You still owe your 2027 RMD by December 31 of that year. So two distributions land in the same tax year. Holding the balance flat as a simplifying assumption, the second one is $800,000 divided by 25.5, or $31,372.55.4 Stack them and you’ve moved $61,561.23 in a single year.
That doubled-up year is what pushes people into a higher bracket and past a Medicare threshold. One year carries $61,561.23 of RMD income instead of $30,188.68. For most retirees, taking the first RMD on time is cleaner.
Which accounts have RMDs, and which don’t?
RMDs apply to tax-deferred retirement accounts. Traditional IRAs, SEP and SIMPLE IRAs, 401(k)s, 403(b)s, and 457(b) plans all count.1
Your Roth IRA doesn’t, as long as you’re alive.1 That exemption is worth real money. The account keeps compounding tax free with nobody forcing withdrawals, which is why Roth dollars are so useful late in retirement and for heirs.
One update worth knowing, because a lot of older articles still get it wrong. The Roth side of a workplace plan, a Roth 401(k) or Roth 403(b), used to require distributions. That rule went away starting in 2024.1 If you have a Roth 401(k), the IRS no longer forces you to take anything from it during your lifetime.
Inherited accounts follow their own rules, and they’re more complicated than what’s covered here. If you’ve inherited an IRA, that’s worth a separate conversation.
How is the RMD amount calculated?
Take your account balance on December 31 of the prior year and divide it by a life expectancy factor the IRS publishes in the Uniform Lifetime Table.4 One exception: if your spouse is more than ten years younger than you and is your only beneficiary, you use a different and more generous table.4
That’s it. Two inputs: how much you have, and how old you are.
The factor shrinks as you age, so the share of your account you must withdraw climbs every year. At 73 the factor is 26.5, which is about 3.8% of the balance. At 80 it’s 20.2, or about 5.0%. By 85 it’s 16.0, or about 6.3%.4
Here’s the health version. A yearly physical checks the same things every time, but the numbers your doctor watches get stricter as you age. RMDs work the same way. Same account, same rule, but the slice the IRS pulls grows with every birthday.
That escalation is what almost nobody sees coming. People plan carefully for their first RMD and assume that’s the number going forward. It’s the smallest number they’ll ever take.
You can always withdraw more than the minimum. You just can’t take less.
The multiple-account rule that trips people up
If you have several traditional IRAs, you can add up the total required across all of them and take the whole amount from any one, or any combination.1 Flexible, and useful if one account holds something you’d rather not sell right now.
Workplace plans are stricter. Each 401(k) and each 457(b) generally has to satisfy its own RMD from that specific plan.1 You can’t cover your old employer’s 401(k) by pulling extra from your IRA. Multiple 403(b) contracts are the exception and can be aggregated with each other, the way IRAs can.1
Getting this backward is one of the more common ways people end up with a penalty they never saw coming.
What happens if I miss an RMD?
The IRS charges an excise tax of 25% of whatever you failed to withdraw. Correct it inside the two-year correction window and that drops to 10%.3 You report it on Form 5329.
It’s one of the steeper penalties in the tax code, and it’s completely avoidable. This is why a lot of retirees set up automatic distributions with their custodian once they hit RMD age. Automating it takes the deadline off your plate entirely.
One thing worth knowing: your custodian will usually calculate the figure for you, but the legal responsibility to withdraw the correct amount is yours, not theirs.
How do RMDs affect my taxes and Medicare?
An RMD is ordinary income, so it stacks on top of your Social Security, your interest, and your dividends. A large one can move you into a higher bracket, increase how much of your Social Security is taxable, and push you past a Medicare income threshold that raises your premiums two years later.
That last piece has real teeth, and it deserves more room than this post can give it. We walked through the whole thing, including the 2026 Medicare surcharge tiers and what one dollar over a line actually costs, in our post on whether RMDs can push you into a higher tax bracket and raise your Medicare premiums.
How do I plan ahead of 73?
The stretch between the day you stop working and the day your first RMD lands is usually the lowest-income window of your adult life. It’s also the only one where you’re fully in control. Most people leave it on the table.
A few general levers worth understanding.
Roth conversions. Moving money from a traditional IRA to a Roth means paying tax now, in a year you can plan around, instead of later in a year you can’t. It also shrinks the balance your future RMDs get calculated on. The trade-offs are real: the tax is due that year, the move can’t be undone, and it adds to the income that drives your Medicare premium two years out. Our guide on whether Roth conversions are still worth it in 2026 walks through when it fits.
Qualified charitable distributions. From age 70 and a half you can send money straight from your IRA to a qualifying charity. It counts toward your RMD and stays out of your income entirely.5 The limits are specific. QCDs come only from IRAs, never an employer plan, and donor-advised funds don’t qualify. There’s an annual per-person cap, and you can’t also deduct the same gift.
Withdrawal sequencing. Which account you draw from, and in what order, changes your taxable income every year without changing what you actually spend.
None of these are one-size-fits-all. The math depends on your balances, your income, and your goals. But the theme holds: the people who handle RMDs well are the ones who started before the first one was due.
Frequently Asked Questions
At what age do I have to start taking RMDs?
Age 73 if you were born from 1951 through 1959. Age 75 if you were born in 1960 or later, which means the first age-75 distributions come due in 2035.2
Do Roth IRAs have required minimum distributions?
Not during the original owner’s lifetime.1 The money keeps compounding tax free with no forced withdrawals, which is one of the Roth IRA’s most valuable features.
What’s the penalty for missing an RMD?
25% of the amount you failed to withdraw, reduced to 10% if you correct it within the two-year correction window.3 You report it on Form 5329.
Can I take my whole RMD from just one IRA?
If you have several traditional IRAs, yes. Total the requirement across them and withdraw it from any one or any combination. Workplace plans like 401(k)s are stricter, and each generally has to satisfy its own RMD.1
How is my RMD calculated?
Your account balance on December 31 of the prior year divided by a life expectancy factor from the IRS Uniform Lifetime Table.4 At 73 the factor is 26.5, so the first RMD is about 3.8% of the balance. The percentage rises every year after that.
Should I delay my first RMD until April 1?
Usually not. Delaying means two distributions land in the same tax year, which stacks your income and can push you into a higher bracket or past a Medicare threshold. Taking the first one on time is cleaner for most retirees.
Sources
- Internal Revenue Service, Retirement plan and IRA required minimum distributions FAQs. ↩
- Congressional Research Service, Required Minimum Distribution (RMD) Rules for Original Owners of Retirement Accounts (SECURE 2.0 applicable ages). ↩
- Internal Revenue Service, Retirement topics: Required minimum distributions (RMDs) (excise tax and Form 5329). ↩
- Internal Revenue Service, Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs) (life expectancy tables, Appendix B). ↩
- Internal Revenue Service, Retirement plans FAQs regarding IRA distributions (withdrawals) (qualified charitable distributions). ↩
Educational content only. Not personalized investment, tax, or legal advice. Any example shown is hypothetical and does not represent an actual client, account, or result.
Ready to see how this plays out for you?
The rules above are the same for everyone. What they cost you is not. Your version depends on your balances, your age, and what your income looks like between now and 73.
Grab the free eBook. The Retirement Tax Bomb covers how tax-deferred accounts build a future tax bill and the levers that defuse it.
Run your own numbers. Try our retirement withdrawal calculator and tax bracket calculator.
Or just talk it through. Book a QuickFit call. Short, no pressure, just to see whether we’re a fit.
More on how we approach retirement planning, our RMD episode on The Fiscal Physical Podcast, and our post on RMDs, tax brackets, and Medicare premiums.
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Alchemy Wealth Management is an investment adviser registered with the State of Nevada. This article is for educational purposes only. It is not personalized investment, tax, or legal advice, and it is not a recommendation to buy, sell, or hold any security or to pursue any particular strategy. The $800,000 example is hypothetical and illustrative. It does not represent an actual client or account, the balance is held constant as a simplifying assumption, and no rate of return is assumed or implied. Nothing here is a guarantee or assurance of any tax savings, premium reduction, or other result. Tax rules, RMD ages, life expectancy factors, and Medicare thresholds change, and future law may differ materially from current law. Alchemy Wealth Management does not provide tax or legal advice. Please consult a qualified tax or legal professional about your own situation. Figures cited were current as of publication.
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Sources
[1]: Internal Revenue Service, “Retirement topics – Required minimum distributions (RMDs).” https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-required-minimum-distributions-rmds
[2]: Internal Revenue Service, Internal Revenue Bulletin 2024-33, Treas. Reg. section 1.401(a)(9)-2(b)(2)(vi), implementing SECURE 2.0 Act section 107. https://www.irs.gov/pub/irs-irbs/irb24-33.pdf
[3]: Congressional Research Service, “Required Minimum Distribution Rules for Original Owners of Retirement Accounts.” https://www.congress.gov/crs-product/IF12750
[4]: Internal Revenue Service, Publication 590-B, Uniform Lifetime Table (Table III). https://www.irs.gov/publications/p590b
[5]: Internal Revenue Service, Publication 590-B, “Qualified charitable distributions (QCDs).” https://www.irs.gov/publications/p590b
