Required Minimum Distributions Explained Without the Jargon

By the WinDailyGames Editorial Team

For decades, the deal with a traditional retirement account is that you put money in before taxes, it grows untaxed, and you pay income tax later when you take it out. "Later" doesn't mean "never." At a certain age, the government requires you to start withdrawing a minimum amount each year so it can finally collect the taxes it deferred. Those mandatory withdrawals are Required Minimum Distributions, or RMDs.

The rules around them have changed recently, the math has a few traps, and the penalty for getting it wrong used to be severe. None of it is complicated once it's laid out plainly.

What an RMD is and which accounts it applies to

An RMD is the smallest amount you're required to withdraw from certain retirement accounts each year once you reach the starting age. You can always take out more; you just can't take out less without a penalty.

RMDs apply to tax-deferred accounts: traditional IRAs, SEP and SIMPLE IRAs, and most employer plans like 401(k)s, 403(b)s, and 457(b)s. They do not apply to a Roth IRA during the original owner's lifetime — Roth money was taxed going in, so the government has no deferred taxes to collect, and a Roth IRA can be left to grow untouched. Under the SECURE 2.0 Act, Roth balances inside employer plans (a Roth 401(k), for example) are also no longer subject to lifetime RMDs starting in 2024, which removed an old quirk that used to push people to roll them into Roth IRAs just to avoid withdrawals.

There's also a still-working exception: if you're still employed past the RMD age and don't own more than 5 percent of the company, you can generally delay RMDs from that current employer's plan until you retire. This exception does not apply to IRAs or to old plans from former employers.

When RMDs start, and the deadlines

The starting age has moved twice in recent years. Under SECURE 2.0, the RMD age is now 73 for people who reached 72 after December 31, 2022 (roughly, those born between 1951 and 1959). For people born in 1960 or later, the age rises again to 75, beginning in 2033.

The deadline structure has one wrinkle worth understanding. Your very first RMD can be delayed until April 1 of the year after the year you reach the starting age — this is called your required beginning date. Every RMD after the first must be taken by December 31 of its year. The trap is that delaying your first RMD to April 1 means you take two RMDs in the same calendar year (the delayed first one plus that year's regular one), which can push you into a higher tax bracket. For many people it's simpler and cheaper to take the first RMD in the year they turn the starting age rather than deferring it.

How to calculate it

The calculation itself is a single division. Take the account's balance as of December 31 of the prior year and divide it by a life-expectancy factor the IRS publishes. Most people use the IRS Uniform Lifetime Table, found in IRS Publication 590-B; the factor for your age is updated annually and built to spread withdrawals across your expected remaining lifetime. (A different table applies if your sole beneficiary is a spouse more than ten years younger.)

So if your traditional IRA held $400,000 at the end of last year and your factor this year is, say, 26.5, your RMD would be roughly $15,094 — the amount you must withdraw by the deadline. Your IRA custodian will usually calculate the figure for you and report it, but the legal responsibility to take the correct amount is yours, so it's worth confirming.

One aggregation rule saves steps: if you have several IRAs, you add up the RMDs for all of them and can take the total from any one or any combination — the IRS only cares that the total comes out. Employer plans like 401(k)s don't get this flexibility; each plan's RMD must be taken from that plan separately.

The penalty for missing one — now smaller

Missing an RMD used to carry one of the harshest penalties in the tax code: a 50 percent excise tax on the amount you failed to withdraw. SECURE 2.0 reduced it. The penalty is now 25 percent of the shortfall, and it drops to 10 percent if you correct the mistake promptly — generally within a two-year correction window — by taking the missed amount and filing the right form (Form 5329).

The IRS has also long been willing to waive the penalty entirely if the miss was due to a reasonable error and you take steps to fix it. The practical lesson is the same either way: if you realize you missed an RMD, don't panic and don't ignore it — withdraw the missed amount as soon as you notice and file the correction. The system is far more forgiving of an honest, promptly fixed mistake than of one left unaddressed.

The charitable workaround: Qualified Charitable Distributions

For people who give to charity, there's a provision that turns an RMD obligation into a tax advantage. A Qualified Charitable Distribution, or QCD, lets you send money directly from your IRA to a qualified charity. The amount counts toward your RMD for the year but is excluded from your taxable income — which is often better than withdrawing the money, paying tax on it, and then donating, especially if you don't itemize deductions.

You can make QCDs starting at age 70½, and there's an annual limit per person that is indexed for inflation — it was $105,000 in 2024 and $108,000 in 2025. The key mechanical detail is that the money must go directly from the IRA to the charity; if it passes through your own hands first, it doesn't qualify. QCDs apply to IRAs, not to 401(k)s, and the charity must be an eligible organization (donor-advised funds and private foundations generally don't count). For a charitably inclined retiree, it's one of the cleanest tax moves available — but confirm the current year's limit and the rules at IRS.gov before you act.

Where to learn more

The IRS's main page on Required Minimum Distributions, with FAQs and the current rules: irs.gov

IRS Publication 590-B, which contains the life-expectancy tables used to calculate RMDs: irs.gov/forms-pubs

Because RMD timing interacts with taxes, Social Security, and Medicare premiums, a one-time conversation with a tax professional in the year you first take RMDs is often worth the cost.