Required Minimum Distribution (RMD): Definition and How It Works

A Required Minimum Distribution (RMD) is the minimum amount the IRS requires a retirement account owner to withdraw from a tax-deferred retirement account each year once they reach the applicable starting age. Under IRC §401(a)(9), RMDs apply to Traditional IRAs, SEP IRAs, SIMPLE IRAs, 401(k) plans, 403(b) plans, and governmental 457(b) plans. Because contributions to these accounts were made on a pre-tax basis (or earnings accumulated tax-deferred), the government mandates withdrawals so that the deferred income tax is eventually collected. Failure to take a full RMD triggers one of the highest penalties in the tax code. The SECURE 2.0 Act of 2022 (Pub. L. 117-328) materially changed RMD ages, reduced the penalty for shortfalls, and eliminated Roth 401(k) RMDs beginning in 2024.

RMD Starting Age

Under SECURE 2.0, the required beginning date depends on the account owner's birth year:

The required beginning date is April 1 of the year following the year in which the account owner reaches their applicable RMD age. For all subsequent years, RMDs must be taken by December 31. If an owner delays the first RMD to April 1, they will take two RMDs in that first year — one for the prior year (by April 1) and one for the current year (by December 31) — which can create a significant income spike and push the taxpayer into a higher bracket or trigger IRMAA surcharges on Medicare premiums.

Accounts Subject to RMDs

RMDs apply to all tax-deferred retirement accounts, including:

• Traditional IRAs (including rollover IRAs)
• SEP IRAs
• SIMPLE IRAs
• 401(k), 403(b), and 457(b) employer plans (including solo 401(k)s for self-employed individuals)
• Inherited IRAs and inherited defined contribution plans (see Inherited Account rules below)

Roth IRAs held by the original owner are exempt from RMDs during the owner's lifetime. Beginning January 1, 2024, Roth 401(k) accounts are also exempt from RMDs (SECURE 2.0, §325). This elimination of the Roth 401(k) RMD is a significant planning change for high earners who want to allow their Roth 401(k) to continue growing tax-free indefinitely.

How to Calculate an RMD

Each year's RMD is calculated using this formula (IRS Publication 590-B):

RMD = Account Balance on December 31 of the Prior Year ÷ Distribution Period

The Distribution Period comes from the IRS Uniform Lifetime Table (updated in Treasury Regulations effective January 1, 2022). The table reflects each age's estimated remaining life expectancy. For example:

Exception — Sole Beneficiary Spouse: If the account owner's sole beneficiary is a spouse who is more than 10 years younger, the owner may use the Joint and Last Survivor Table instead, which produces a longer distribution period and a smaller annual RMD.

Multiple accounts: For Traditional IRAs, the owner may aggregate the RMD amounts across all IRAs and take the total from any one (or a combination). For 401(k) and 403(b) plans, the RMD from each plan must be taken from that specific plan — cross-plan aggregation is not permitted (except across multiple 403(b) accounts).

Example: A taxpayer age 75 has two Traditional IRAs with December 31, 2025 balances of $300,000 and $200,000. Combined balance = $500,000. RMD = $500,000 ÷ 24.6 = $20,325. This amount can be taken from either or both IRA accounts in any combination.

Penalty for Missing an RMD

Under SECURE 2.0, the excise tax for failing to take an RMD was reduced from 50% to 25% of the shortfall (not the full RMD amount). The penalty drops further to 10% if the shortfall is corrected within the Correction Window — which is the earlier of: (1) the date a deficiency notice is issued; or (2) the last day of the second taxable year following the year the shortfall occurred. The penalty is reported on IRS Form 5329.

CPAs should note that the IRS has historically granted waivers for first-time, reasonable-cause RMD failures, but SECURE 2.0's lower penalty now provides a statutory correction path without requiring a formal waiver request.

Inherited Retirement Accounts

RMD rules for inherited accounts differ significantly based on when the original owner died and the beneficiary's relationship:

Account owner died before January 1, 2020 (pre-SECURE Act): Non-spouse beneficiaries could stretch RMDs over their own life expectancy — the "stretch IRA." This planning tool is largely eliminated for most inheritors going forward.

Account owner died on or after January 1, 2020 (SECURE Act): Most non-spouse beneficiaries must fully deplete the inherited account within 10 years of the owner's death (the "10-year rule"). There are no annual RMD requirements during years 1–9 — only the full depletion requirement by the end of year 10.

However, if the original owner had already reached their required beginning date, IRS proposed regulations (issued July 2024 and finalized for 2025) clarify that non-eligible designated beneficiaries must take annual RMDs in years 1–9 calculated under the applicable divisor, with full depletion by year 10.

Eligible Designated Beneficiaries (surviving spouses, minor children, disabled or chronically ill individuals, and beneficiaries not more than 10 years younger than the owner) retain stretch IRA treatment under their own life expectancy rules.

Using a Qualified Charitable Distribution to Satisfy an RMD

Taxpayers age 70½ or older can make a Qualified Charitable Distribution (QCD) directly from a Traditional IRA to an eligible charity. QCDs are excluded from gross income up to $108,000 in 2026 (annually indexed for inflation under SECURE 2.0). Critically, a QCD counts toward the account owner's RMD for the year — so a taxpayer who must take a $15,000 RMD can satisfy it entirely through a $15,000 QCD without the distribution appearing as taxable income. This is one of the most tax-efficient charitable giving strategies available, particularly for taxpayers who take the standard deduction and cannot otherwise benefit from a charitable deduction.

How CPAs Use RMD Planning

RMDs create both compliance obligations and planning opportunities:

• Timing the first RMD: CPAs evaluate whether delaying to April 1 is worth the two-RMD-in-one-year income spike or whether December 31 of the first year is better given bracket exposure.
• Roth conversion before RMD age: Converting Traditional IRA funds to a Roth IRA reduces future RMD exposure by shrinking the tax-deferred account balance. See our Roth IRA conversion guide for conversion strategy mechanics.
• IRMAA management: Large RMDs push modified AGI up, potentially triggering IRMAA Medicare surcharges two years later. See IRMAA.
• Aggregation optimization: For IRA owners with multiple accounts, CPAs can optimize which account funds the RMD based on investment positioning and planned distributions.
• Qualified plan RMDs post-retirement: Employees who continue working past their RMD age at a company where they do not own more than 5% of the business can defer 401(k) RMDs from that employer's plan until they retire.
• SECURE 2.0 interaction: The elimination of Roth 401(k) RMDs and the new catch-up contribution rules interact with RMD projections for high-income plan participants. See the SECURE 2.0 planning guide and mandatory Roth catch-up contribution rules for the full picture.

Related Terms

• Roth IRA — Roth IRA accounts are exempt from RMDs during the owner's lifetime
• Qualified Charitable Distribution — A QCD can satisfy an RMD without generating taxable income
• Modified Adjusted Gross Income (MAGI) — Large RMDs increase MAGI, affecting IRMAA and other phaseouts
• IRMAA — Medicare income-related premium surcharge triggered by high MAGI
• Catch-Up Contribution — Additional contributions allowed for retirement account holders age 50+, with a super catch-up tier for ages 60–63
• Inherited IRA (plain text — see IRS Publication 590-B for the full inherited account rules)