Learn when required minimum distributions begin, how an RMD is calculated, which retirement accounts are covered, and what happens if one is missed.
A required minimum distribution, or RMD, is the minimum amount that generally must be withdrawn each year from certain tax-deferred retirement accounts after the owner reaches the applicable starting age. Beneficiaries of inherited retirement accounts may also face annual distributions, a deadline to empty the account, or both.
An RMD is not an extra tax. It is a required withdrawal. The taxable part of the distribution generally becomes income, while any documented after-tax basis may be recovered under separate rules.
Under current federal rules, many account owners begin RMDs for the year they reach age 73. People born in 1960 or later are generally scheduled to begin at age 75. Earlier birth years can be governed by older starting ages, so the answer depends on date of birth and whether the person had already reached a prior required beginning date.
A qualifying employee may be able to delay RMDs from a current employer's plan until retirement if the plan permits and the employee is not a more-than-5% owner. That exception generally does not delay RMDs from traditional IRAs or former-employer plans.
RMDs commonly apply to traditional IRAs, SEP IRAs, SIMPLE IRAs, 401(k), 403(b), governmental 457(b), profit-sharing, and other defined-contribution plans. Roth IRAs do not require lifetime RMDs from the original owner. Designated Roth accounts in employer plans also no longer require lifetime RMDs for the original owner under current federal rules.
Inherited traditional and Roth accounts have separate beneficiary rules. The decedent's date of death, the beneficiary's relationship and age, disability or chronic-illness status, whether the beneficiary is an individual, and whether the owner died before the required beginning date can all change the result.
For many owners, the basic calculation is:
Prior December 31 account balance ÷ applicable life-expectancy factor = RMD
Suppose Maria's traditional IRA was worth $540,000 on December 31 of the prior year. If her correct Uniform Lifetime Table divisor is 25.5:
$540,000 ÷ 25.5 = $21,176.47
The Joint and Last Survivor Table can apply when the sole beneficiary is a spouse more than ten years younger. The Single Life Table is commonly used for beneficiaries. Transfers, rollovers, outstanding rollovers, recharacterizations, and account corrections can affect the balance used.
Each traditional IRA's RMD must be calculated separately, but an owner can generally withdraw the combined IRA amount from one or more of the owner's traditional, SEP, or SIMPLE IRAs. A similar aggregation rule can apply to certain 403(b) accounts.
RMDs from most employer plans generally must be taken separately from each plan. An IRA RMD cannot ordinarily be satisfied from a 401(k), and one person's withdrawal cannot satisfy a spouse's RMD.
Retirement distributions are commonly reported on Form 1099-R and then on Form 1040. A distribution is not necessarily fully taxable if the owner has nondeductible IRA basis, qualified designated Roth amounts, or another after-tax investment in the contract. Form 8606 may be needed for traditional IRA basis.
Federal income-tax withholding can be requested from a distribution. Withholding and estimated payments affect the balance due, but they do not change the RMD amount.
California generally includes the federally taxable retirement distribution in California income, subject to California basis and conformity adjustments. California does not impose a separate RMD calculation merely because the taxpayer resides in California, but state taxable income can differ from federal taxable income.
The federal excise tax is generally 25% of the shortfall. It may be reduced to 10% when the shortfall is corrected within the statutory correction window. The IRS may waive the tax when the shortfall resulted from reasonable error and reasonable steps are being taken to correct it.
Form 5329 is used to report the shortfall, excise tax, and a waiver request. A taxpayer should generally take the missed amount promptly, document what happened, and avoid assuming the account custodian will fix the tax filing.
A qualified charitable distribution, or QCD, made directly from an IRA to an eligible charity can count toward an RMD when all requirements are met. It can be available beginning at age 70½, even though the owner's RMD age may be later. Roth conversions before RMD age can reduce future traditional-account balances, but an RMD for the year cannot be converted.
Common mistakes include using the current balance instead of the prior year-end balance, applying the wrong life-expectancy table, combining plans that cannot be aggregated, waiting until April without accounting for a second RMD, treating an inherited account like the beneficiary's own IRA, and overlooking after-tax basis.
Retain year-end account statements, beneficiary designations, Forms 1099-R and 5498, rollover records, prior Forms 8606, distribution confirmations, QCD acknowledgments, and calculations for every account. Beneficiaries should also retain the owner's death certificate, account agreement, and documentation of their beneficiary classification.
Heath Income Tax can reconcile RMDs, retirement-account basis, Forms 1099-R, and California adjustments and help address a missed distribution.
Can I withdraw more than the RMD?
Yes. The excess generally does not reduce a future year's RMD.
Can I roll over an RMD?
No. An amount required to be distributed for the year is generally not eligible for rollover.
Does my custodian calculate the RMD?
Many custodians provide calculations, but the account owner remains responsible for the correct amount and deadline.
Do inherited Roth IRAs have RMD rules?
Yes. The original owner has no lifetime Roth IRA RMD, but beneficiaries can be subject to post-death distribution rules.
The definitions and examples on this page are for informational purposes only and do not constitute tax advice. Tax laws change frequently and individual circumstances vary. Consult a qualified tax professional before making decisions based on this content.
Click a question or ask us your own.
Ask Us a Question
Message Sent!
Thank you — we'll get back to you as soon as possible.