What is a Required Minimum Distribution?

A Required Minimum Distribution (RMD) is the minimum amount of money that the IRS mandates you must withdraw from your tax-deferred retirement accounts (such as traditional IRAs, 401(k)s, 403(b)s, or SIMPLE IRAs) each year. You can calculate your exact withdrawal amount using our RMD Calculator.

Because these accounts let you save pre-tax money, RMDs exist to ensure the government eventually receives income tax on those retirement savings.

What Age Do RMDs Begin?

Under the SECURE Act 2.0, the starting age for RMDs depends on your birth year:

  • Born before 1951: RMDs began at age 72 or 70½.
  • Born between 1951 and 1959: Your RMDs begin at age 73.
  • Born 1960 or later: Your RMDs begin at age 75.

How is Your RMD Calculated?

Your RMD is determined by dividing your account balance on December 31 of the previous year by a “distribution period” number provided by the IRS.

The IRS provides three life expectancy tables. Most retirees use the Uniform Lifetime Table (Table III), which assumes a joint life expectancy with a beneficiary who is not more than 10 years younger. Calculate your RMD in our RMD calculator.

📖 Real-Life Scenario

Calculating the Correct Annual RMD at Age 73

Harold, 73 — Ohio Retired physician | Traditional IRA: $500,000 (as of Dec 31, 2025)

Harold's traditional IRA had a balance of $500,000 on December 31, 2025. Under IRS rules, his 2026 Required Minimum Distribution is calculated by dividing the prior year-end balance by his life expectancy factor from IRS Uniform Lifetime Table III. At age 73, that factor is 26.5 years. His 2026 RMD: $500,000 ÷ 26.5 = $18,868. Harold must withdraw at least this amount by December 31, 2026 (the April 1 extension applies only to the first-ever RMD). He scheduled the withdrawal for mid-November — keeping his money invested as long as possible — and instructed his custodian to withhold 22% for federal taxes and 4% for Ohio state taxes, avoiding an April underpayment surprise.

Key Numbers in This Case:
  • IRA balance (Dec 31, 2025): $500,000
  • IRS Uniform Lifetime Table III factor at age 73: 26.5 years
  • 2026 RMD calculation: $500,000 ÷ 26.5 = $18,868
  • Federal withholding from distribution: 22% ($4,151)
  • Deadline: December 31, 2026 (not April 1 — that extension is first-ever RMD only)
💡 Key Takeaway: Always calculate your RMD yourself before relying on your custodian's number — custodians calculate correctly in most cases but errors occur, and the penalty for a shortfall falls on you, not them.

The Costly Penalty for Missing an RMD

If you fail to withdraw your full RMD amount by the deadline, the IRS imposes a severe tax penalty:

  • Standard Penalty: 25% of the amount you failed to withdraw.
  • Corrected Penalty: Reduced to 10% if you correct the error and withdraw the missing amount within two years.

For example, if your RMD was $10,000 and you withdrew $0, the standard tax penalty is $2,500.

⚠️ Common Mistakes to Avoid

❌ Mistake 1: Missing the December 31 Withdrawal Deadline

If you fail to withdraw the required minimum amount by December 31, the IRS imposes a 25% excise tax on the amount you should have taken but did not. Under the SECURE 2.0 Act, this penalty was reduced from 50% to 25%, and can be further reduced to 10% if you correct the error by taking the missed RMD and filing IRS Form 5329 within two correction years. On a $15,000 missed RMD, the 25% excise tax equals $3,750.

✅ What to Do Instead:
  • Set a calendar reminder in October each year to calculate your RMD amount and schedule the withdrawal — allow at least two weeks for custodian processing before December 31.
  • If you missed an RMD, take the missed amount immediately, include it in your income for the correction year, and file Form 5329 with your tax return to report the excess accumulation and the corrected amount.
  • Ask your IRA custodian whether they offer automatic RMD distribution — many custodians will automatically calculate and distribute your RMD annually if you authorize it.

❌ Mistake 2: Assuming Your Custodian's RMD Calculation Is Always Correct

IRA custodians calculate and report RMD amounts to the IRS, but errors do occur — particularly when you have multiple IRA accounts, recently inherited an IRA, or made non-deductible contributions tracked on Form 8606. If your custodian underestimates your RMD and you take the lower amount, the IRS holds you — not the custodian — responsible for the shortfall and resulting excise tax.

✅ What to Do Instead:
  • Calculate your own RMD each year using the IRS Uniform Lifetime Table (Table III), available at irs.gov in Publication 590-B.
  • If you have multiple traditional IRAs, calculate the RMD for each account separately using each account's December 31 balance, then add them — you can take the combined total from any one or any combination of your IRAs.
  • Keep a simple spreadsheet each year recording: IRA balance (Dec 31 prior year), your age, the applicable life expectancy factor, and your RMD amount.

❌ Mistake 3: Not Withholding Taxes From Your RMD Distribution

RMD distributions are fully taxable as ordinary income in the year withdrawn (assuming the IRA is a traditional pre-tax account). Seniors who request the full gross distribution without any withholding are sometimes surprised by a large tax bill in April, and potentially an underpayment penalty as well. By default, custodians are required to withhold 10%, but you can request a higher percentage.

✅ What to Do Instead:
  • When you authorize your annual RMD, instruct your custodian to withhold a percentage that approximates your marginal tax rate — 22%, 24%, or whatever rate applies to your situation.
  • If your RMD distribution significantly increases your taxable income, calculate whether the additional income pushes you into IRMAA territory (higher Medicare premiums two years later) — this may affect the timing of your withdrawal.
  • Consider having your CPA estimate your total tax liability for the year before you take your RMD, so you can request appropriate withholding and avoid a penalty.