What Are RMDs?

April 20, 2023

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What we’ll cover:

RMD is the amount of money you have to withdraw from certain retirement accounts after a specific age
RMD rules are outlined by the IRS, and failure to follow those rules could result in a penalty
Given the complexity of RMD rules, consider consulting a tax professional to confirm your RMD obligations

RMD stands for Required Minimum Distribution. It’s the minimum amount of money you have to withdraw (or “distribute” in IRS speak) from certain types of retirement savings accounts each year after a specific age. RMD rules are outlined by the IRS, and distributions are usually subject to income tax.

Who has to take RMDs?

You’ll have to pay attention to RMD rules if you have any one of these retirement savings accounts or retirement plans:

Traditional IRA
SEP IRA
SIMPLE IRA
401(k), 403(b) and 457(b) plan
Profit-sharing plan
Other defined contribution plan

You may have noticed that Roth IRAs are not on the list. That’s because you don’t have to take RMDs from your Roth IRA if you’re the original owner of the account. But the person who inherits your account – your beneficiary – may have to take RMDs after your passing (see IRS Topic: “Required Minimum Distributions for IRA Beneficiaries”).

Good to know: Starting in 2024, RMD rules will not apply to Roth 401(k) participants while they’re alive (but their beneficiaries may have to take RMDs after the account owner’s passing). Consult with a tax professional or visit the IRS website for details.

When do you need to take RMDs?

RMDs are withdrawals that you must make starting at age 73 (or age 72 if you turned 72 on or before December 31, 2022). RMDs are required by the IRS, and failure to take RMDs may result in penalties.

The IRS website can provide details on your options and obligation, as well as additional information regarding how RMD amounts are calculated (see: “Required Minimum Distributions”).

Keep in mind that RMD rules can be complicated. This is why it’s a good idea to get help from a financial advisor or tax professional.

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