RMD (required minimum distribution)

RMDs — the IRS takes its share eventually

Required minimum distributions (RMDs) force you to pull money out of your tax-deferred retirement accounts starting at age 73 (or 75 for those born 1960+). The rationale is simple: you deferred income tax on contributions and growth for decades, and the IRS wants its taxes before you die. This calculator shows your RMD for the current year using the IRS Uniform Lifetime Table.

The formula

RMD = prior-year-end balance ÷ life-expectancy factor

The IRS publishes the life-expectancy factors in the Uniform Lifetime Table (updated in 2022 for longer lifespans). At age 73 the factor is 26.5, meaning you withdraw 1/26.5 = 3.77% of the prior year-end balance. At 85 it's 16.0 (6.25%). At 95 it's 8.9 (11.2%). The percentage grows with age because remaining life expectancy shrinks.

Which accounts are subject

• Traditional IRA, SEP IRA, SIMPLE IRA— subject to RMDs
• Traditional 401(k), 403(b), 457(b)— subject to RMDs
• Roth IRA — NO RMDs during your lifetime
• Roth 401(k) — after 2023 — no longer subject to RMDs under SECURE 2.0
• Inherited IRA — different rules, see below

If you have multiple traditional IRAs, you can aggregate — calculate the RMD for each, then take the total from any single IRA. 401(k)s cannot be aggregated — you must take each plan's RMD from that specific plan.

The "still working" exception

If you're still employed at age 73+ and you're not a 5%+ owner of the company, you can generally defer RMDs from that specific employer's 401(k)until you retire. IRAs and other non-current-employer plans are not covered — you still owe RMDs on those. This is why rolling an old 401(k) into an IRA pre-retirement can be a mistake if you plan to keep working past 73.

First-year RMD and the April-1 rule

Your first RMD can be deferred until April 1 of the year after you turn 73. But your second RMD must be taken by December 31 of that same year. So deferring means two RMDs in one tax year, potentially pushing you into a higher bracket, increasing Medicare IRMAA, and triggering more Social Security taxation. Most retirees take the first RMD in the same year they turn 73.

Penalty for missing an RMD

Pre-SECURE-2.0, the penalty was 50% of the missed RMD. SECURE 2.0 reduced it to 25%, and 10% if corrected within 2 years. The IRS typically grants penalty waivers on first offense if you file Form 5329 with a "reasonable cause" explanation. Still, the penalty is severe — set up automatic distributions with your broker.

Strategies to reduce RMD pain

• Roth conversions before 73. Converting traditional IRA to Roth during gap years (between retirement and RMD age) reduces the balance that becomes subject to RMDs. Pay the tax now in a lower bracket; avoid forced distributions later.
• Qualified Charitable Distributions (QCDs). If you're charitably inclined, direct up to $105,000/yr (2024) from your IRA to charity — it counts toward RMD but stays out of AGI. Reduces Medicare IRMAA premiums and Social Security taxation.
• Front-load withdrawals in early retirement. Take traditional-IRA distributions in your 60s when income is lower, filling lower brackets. This reduces the balance compounding toward RMDs.
• Work longer. The still-working exception for your current 401(k) can defer RMDs on that portion.

Inherited IRAs and the 10-year rule

For accounts inherited from someone who died in 2020 or later, the SECURE Act generally requires full distribution within 10 years. Exceptions: spouses, minor children (of the decedent), chronically ill or disabled beneficiaries, and beneficiaries less than 10 years younger than the decedent. These "eligible designated beneficiaries" can stretch distributions over their lifetime.

For the 10-year rule, the IRS has indicated (after years of confusion) that annual RMDs ARE required during the 10 years if the decedent was already past RMD age. If they died pre-RMD age, you just need to empty the account by year 10 — no annual requirement.

Tax planning around RMDs

RMDs add to your taxable income and can cascade into other tax increases:

• Push you into a higher federal bracket
• Increase Social Security taxation (up to 85% of benefits taxable above thresholds)
• Trigger Medicare IRMAA surcharges (up to $500+/mo in added Medicare premiums for high earners)
• Impact the NIIT (net investment income tax, 3.8% above $200k single / $250k married)
• State income tax (some states exempt retirement income; others don't)

A retiree with $1.5M in traditional IRAs and $50k Social Security can easily see their RMD push them into the 24% federal bracket with full Social Security taxation and the first IRMAA tier — an effective marginal rate of 30–35%. Planning conversions in your 60s can smooth this tax ramp meaningfully.