Required Minimum Distributions (RMD): A Complete Beginner's Guide
- Projected balance (at retirement)
- 1 846 072 $US
- Investment growth
- 1 366 123 $US
A required minimum distribution is the minimum amount you must withdraw each year from a traditional 401k, starting at age 73 (75 if born in 1960 or later). It is calculated by dividing your prior year-end balance by an IRS life-expectancy factor from the Uniform Lifetime Table. For example, the factor at 73 is 26.5, so a $500,000 balance requires about $18,868, and the required percentage rises as the factor shrinks with age. One important boundary: each 401k must satisfy its own RMD separately — unlike IRAs, you cannot combine them and take the total from one account. Missing an RMD triggers a penalty of 25% of the shortfall, reduced to 10% if corrected promptly, though Roth 401k balances no longer require lifetime RMDs under SECURE 2.0, so the safest approach is to automate the withdrawal each year.
Published · Last verified · Written and fact-checked by Ali Raza · Our methodology · Terms explained
What is a required minimum distribution?
A required minimum distribution (RMD) is the smallest amount you are legally required to withdraw from a tax-deferred retirement account each year once you reach a certain age. The government allowed your 401k to grow untaxed for decades; RMDs are how it eventually collects the deferred tax.
RMDs apply to traditional 401k and IRA balances. Roth IRAs have no RMDs during the owner's lifetime, and under SECURE 2.0, Roth 401k accounts no longer require RMDs during the owner's lifetime either — a meaningful change for Roth savers.
When do RMDs begin?
Under current rules, RMDs begin at age 73 for those who reached that age in recent years. For anyone born in 1960 or later, the starting age rises to 75. Your first RMD can be delayed until April 1 of the year after you turn the trigger age, but every RMD after that is due by December 31.
Delaying that first RMD has a catch: you would then take two RMDs in the same calendar year (the delayed first one plus the current year's), which can push you into a higher tax bracket. A drawdown calculator can show how RMDs interact with the rest of your withdrawals. Many retirees take the first RMD on time to avoid doubling up.
How is an RMD calculated?
The formula is straightforward: divide your account balance as of December 31 last year by a life-expectancy factor from the IRS Uniform Lifetime Table. The factor gets smaller as you age, so the required percentage of your balance rises each year.
For example, the factor at age 73 is 26.5. On a $500,000 balance, the RMD is $500,000 ÷ 26.5, which is about $18,868. A 401k RMD calculator does this division for any age and balance. The next year uses a slightly smaller factor, gradually increasing the required withdrawal as a share of the account.
| Age | IRS factor | Approx. RMD |
|---|---|---|
| 73 | 26.5 | $18,868 |
| 75 | 24.6 | $20,325 |
| 80 | 20.2 | $24,752 |
| 85 | 16.0 | $31,250 |
What is the penalty for missing an RMD?
Missing an RMD used to carry a steep 50% excise tax on the amount you failed to withdraw. SECURE 2.0 reduced that to 25%, and to 10% if you correct the shortfall promptly within a set window. Even reduced, it is one of the harshest penalties in the tax code, so the deadline matters.
If you miss an RMD for a reasonable cause and take corrective steps, the IRS can waive the penalty on request. But the safest approach is simply to automate the withdrawal each year so it is never overlooked.
How can you reduce your RMDs?
Because RMDs are taxable and grow as a percentage of your balance over time, some retirees plan ahead to soften the tax impact. Our 401k FAQ hub walks through more RMD scenarios. This is general information; a tax professional can tailor it to your situation.
- Roth conversions before 73 shrink the traditional balance that RMDs are based on.
- Roth 401k funds can be rolled to a Roth IRA to escape lifetime RMDs.
- A qualified charitable distribution can satisfy an RMD tax-free from an IRA (age 70.5+).
- Coordinating RMDs with Social Security timing can help manage your overall tax bracket.
Can you take one RMD from several accounts?
If you hold more than one tax-deferred account, the rules for combining RMDs depend on the account type. RMDs for multiple traditional IRAs can be added together and taken from any one of them in any combination. That flexibility lets you draw the whole total from a single IRA if you prefer.
401k accounts work differently. Each 401k calculates its own RMD, and each must be satisfied from that specific plan. You cannot cover a 401k RMD by withdrawing from an IRA, or from a different 401k. This trips people up when they hold plans at more than one former employer, so it is worth running a 401k RMD calculator for each plan separately.
What are the most common RMD mistakes?
Because the penalty for a shortfall is steep, a few avoidable errors cause most of the trouble. Knowing them in advance is usually enough to stay clear.
- Missing the first-year deadline: the delayed first RMD is due by April 1, but every later one by December 31.
- Taking a 401k RMD from the wrong account — each 401k must satisfy its own RMD separately, unlike IRAs.
- Assuming the still-working exception covers old plans; it does not apply to 401k accounts left at former employers.
- Overlooking that Roth 401k balances no longer require lifetime RMDs under SECURE 2.0.
Frequently asked
RMDs currently start at age 73. For anyone born in 1960 or later, the starting age rises to 75. Your first RMD can be delayed to April 1 of the following year, but later RMDs are due by December 31 each year.