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Retirement, Personal finance March 24, 2023

Answers to questions about required minimum distributions

What to do when your retirement account tax holiday ends

When it comes to taxes, IRAs and 401(k) retirement accounts can offer a valuable tax benefit: contributions to tax-deferred retirement accounts are not counted as taxable income today, and earnings grow tax-deferred until withdrawn. That’s a powerful savings advantage — but the tax deferral eventually ends with required minimum distributions (RMDs).

What are RMDs?

Required minimum distributions (RMDs) are the minimum amounts you must withdraw from certain retirement accounts once you reach a required age, as mandated by U.S. tax law. Withdrawn RMDs are generally included in your taxable income for the year, except for any previously taxed-basis or qualified tax-free amounts.1 RMDs ensure the IRS eventually collects tax on tax-deferred savings.

Changes to RMD ages with SECURE and SECURE 2.0 acts

The age you must begin RMDs has increased over time due to legislative updates:1

Birth yearRMD starting age
Before 1950Previous rules (70½ or 72 depending on timing)
1951-1959Age 73
1960 or laterAge 75 (effective starting 2033)

If you already started RMDs under previous rules, you must continue using the age and schedule that applied when you began.1

What accounts are subject to RMDs?

RMD rules apply to most tax-deferred retirement accounts:1

  • Traditional IRAs (including rollover IRAs)
  • SEP IRAs and SIMPLE IRAs
  • 401(k), 403(b) and 457(b) plans
  • Profit-sharing plans and other defined contribution plans

What accounts are not subject to RMDs?

During the original owner’s lifetime, these accounts are not subject to RMDs:1

  • Roth IRAs — no RMDs while the owner is alive
  • Designated Roth accounts in employer plans (like Roth 401(k)) — also no lifetime RMDs due to SECURE 2.0 changes2

It’s important to note though that beneficiaries of Roth IRAs and Roth employer plan accounts do have to take distributions under beneficiary RMD rules after the owner’s death.

When do I have to start taking RMDs?

Your first RMD is due by April 1 of the year after you reach your applicable RMD age. For all subsequent years, RMDs must be taken by December 31.3

Example:

You turn 73 in 2025, your first RMD for 2025 is due by April 1, 2026.

You could instead take it by December 31, 2025 — but then the next RMD must also be taken by December 31, 2026.

Special employer plan rule: If you continue working past your RMD age and don’t own 5% of the business, you may be able to delay RMDs from that employer’s plan until you retire (check IRS specifics).4

How much must I withdraw?

Your RMD is generally calculated as:

Year-end account balance ÷ IRS life expectancy factor

The IRS publishes life expectancy tables (Uniform Lifetime Table, Joint Life Table, etc.) to determine the applicable divisor.

Example:

If your IRA was valued at $1 million at year-end and your divisor is 26.5:
→ $1 million ÷ 26.5 = $37,735 RMD.4

Your RMD generally increases with age because your life expectancy divisor becomes smaller. If your spouse is the sole beneficiary and is 10+ years younger, you may use a special joint life expectancy table (resulting in smaller RMDs).4

Can I withdraw more?

Yes — you can withdraw more than your RMD amount in any given year, but the extra doesn’t count toward future RMDs.1

Penalties for missing or under-withdrawing RMDs

Failing to take the full RMD by the deadline can trigger an excise tax of 25% of the amount not taken. That’s reduced to 10% if corrected within a specified period (generally two years). The penalty may be waived if the shortfall was due to reasonable error and corrective steps are being taken.1

Recent data suggests a meaningful number of retirees miss their RMDs and incur penalties — sometimes costing thousands of dollars.5

Can I roll over or reinvest my RMD?

No — you cannot roll over an RMD into another tax-advantaged account. Once taken, that amount is taxable income (unless basis or Roth status applies).1

If you have earned income, you could make new contributions to tax-advantaged accounts (subject to normal eligibility and limits), but this is separate from RMD rules.

Planning considerations

RMDs can affect more than just taxes — they may influence:

  • Tax brackets and total income tax
  • Medicare premiums (which are tied to income levels)
  • Social Security taxation
  • Estate planning and legacy strategies

Consult a professional

RMDs and the rules surrounding them can be complex. Consider working with a financial or tax professional to help.

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  1. “Retirement plan and IRA required minimum distributions FAQs.” IRS.gov, January 29, 2026.
  2. Taylor, Kelley R., “Roth 401(k) Changes: New rules to know for 2025 and 2026 taxes.” Kiplinger, February 2, 2026.
  3. “Retirement topics – Required minimum distributions.” IRS, December 11, 2025.
  4. Adam, Hayden, “Required Minimum Distributions: What’s New in 2026.” Charles Schwab, December 22, 2025.
  5. Brumley, James, “Missed RMDs Are a Billion Dollar Mistake,” Warns Vanguard’s Senior Investment Strategist. What Retirees Need to Know.” The Motley Fool, February 3, 2026.

This information is a general discussion of the relevant federal tax laws provided to promote ideas that may benefit a taxpayer. It is not intended nor, no can it by used by any taxpayer for the purpose of avoiding federal tax penalties. Taxpayers should seek the advice of their own advisors regarding any tax and legal issues specific to their situation.

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