Required Minimum Distributions (RMDs) From Retirement Accounts

Eventually, you must take money out of your non-Roth retirement accounts every year—or pay hefty penalties.

By , J.D. · UC Berkeley School of Law
Updated by Jennie Lin, Attorney · Harvard Law School

If you save and invest wisely, you can leave a substantial amount of money in an individual retirement account (IRA) or 401(k)—but eventually you, or your beneficiaries, will have to start taking money out. And you (or your beneficiaries) will be in for financial penalties if you violate the rules.

When Withdrawals Must Begin

The ideal scenario, in the eyes of the IRS, would be to have you exhaust the money in your retirement account at precisely the moment you breathe your last breath. That's why the IRS makes you start withdrawing money in your 70s, and why the amount of these required minimum distributions (RMDs) is tied to your statistical life expectancy.

Traditional IRAs. Distributions become mandatory the year you turn age 73 (effective in 2023). Previously, from 2020-2022, this age was 72, and prior to that, it was 70½. (In 2033, the age that mandatory RMDs begin will increase to 75.) The IRS bases everything on calendar years. You must make one whole year's withdrawal for the calendar year in which you turn 73. This first year, however, your deadline is slightly extended: You have until April 1 of the following year to make the withdrawal. After that, the deadline is always December 31.

EXAMPLE: Robert turns 73 on November 30, 2023. He must take a full year's required minimum distribution for 2023, but he has until April 1, 2024, to do it. He must take 2024's required minimum distribution by December 31, 2024.

Roth IRAs. There are no required distributions from Roth IRAs. As a result, a Roth IRA could contain a much larger amount at your death than a comparable traditional IRA or 401(k).

401(k) accounts. You don't have to withdraw money from your 401(k) until you turn 73 (effective 2023) or you actually retire, whichever is later. If you retire after you are 73, then April 1 of the year following your retirement is the date by which you must make your first required distribution.

Calculating the Required Minimum Distribution (RMD)

The minimum amount you must withdraw is based on your life expectancy and that of a theoretical beneficiary. The IRS provides a table on which you can look up this "joint life expectancy"; then you simply divide the amount in your account by this number and take out the result.

EXAMPLE: Valerie is 75; the IRS Uniform Distribution Period Table gives her a figure of 24.6 years. The balance in her IRA at the end of the previous calendar year was $50,000, so this year she must withdraw $2,032 ($50,000 divided by 24.6).

Whether or not you actually name a beneficiary, the IRS table assumes that your beneficiary is ten years younger than you are. You don't need to consider the beneficiary's actual age unless the beneficiary is your spouse and is in fact more than ten years younger than you. In that case, you can reduce the amount you must withdraw by using a different IRS table that factors in your spouse's actual age.

EXAMPLE 1: Jason turns 73 on February 23. That means by April 1 of the next calendar year, he must have made a year's worth of withdrawals from his IRA account. His wife Molly, the beneficiary of the IRA, is four years younger than he is. The minimum amount he must withdraw is determined by the IRS Uniform Distribution Table. The table assumes that Molly is ten years younger than Jason, which works to their benefit—the minimum amounts Jason must withdraw each year will be smaller than if Molly's actual life expectancy were used.

EXAMPLE 2: Mark names his wife Rita, who is 12 years his junior, as his IRA beneficiary. To calculate his required minimum distribution, he uses the IRS table that calculates his and Rita's joint life expectancy based on their actual ages.

Why You Don't Want to Miss a Required Distribution

If you don't make the legally required withdrawal, you will forfeit a quarter of the amount you should have withdrawn but did not. That's right: There's a full 25% penalty tax. If you take out the missed amount by the end of the second year after it was due, however, the penalty lowers to 10%. (Prior to the SECURE 2.0 Act, which became effective at the beginning of 2023, the penalty was a truly hefty 50% tax.)

EXAMPLE: When Mae is required to begin taking money from her IRA, she dutifully makes a withdrawal—but mistakenly takes out $1,000 less than she should have. The next year, when she files her income tax return, she must pay a $250 tax (and file an extra form) on the $1,000 she should have withdrawn. But if she takes out that missed $1,000 by the end of that next year (in addition to the RMDs for that year), the tax owed is only $100, or 10%.

Retirement Account Withdrawal Rules: A Summary

Your Age

Withdrawal Rules

Younger than 59½

"Premature" withdrawals

Traditional IRAs: Premature or early withdrawals (taken out before you turn 59½) are subject to a 10% penalty tax, unless you become disabled and cannot work, you die, you use the money to buy your first house, or you set up a plan to make regular, equal withdrawals over your life. You cannot borrow from an IRA. (One new exception, introduced by the SECURE Act, is that a new parent can withdraw or borrow $5,000 per child within one year of the child's birth or adoption, without penalty.)

Roth IRAs: Withdrawals of contributions are always tax-free. Qualified withdrawals of earnings are penalty- and tax-free if you've had the account for at least five years and you are disabled or are using the money to buy your first house (up to $10,000).

401(k) plans: You can borrow from your 401(k), but cannot withdraw money from it except for an IRS-recognized hardship, such as to pay medical bills, prevent eviction or foreclosure, pay college tuition, or make a down payment on your primary residence. And you still must pay the 10% penalty on early withdrawals. There are a few exceptions: If you're 55 or older and actually retired, you may make penalty-free withdrawals. And the new-parent exception introduced by the SECURE Act applies to 401(k)s as well.

59½ to 73

"Ordinary" withdrawals

Withdrawals are optional.

Traditional IRAs and 401(k) plans: The amount withdrawn is included in your gross income for income tax purposes.

Roth IRAs: Withdrawals of contributions and of qualified earnings are not taxed.

73 or older

"Required" distributions

Traditional IRAs and 401(k) plans: Withdrawals are required. The minimum amount is based on your life expectancy and the life expectancy of a theoretical or actual beneficiary, as discussed above.

Roth IRAs: Withdrawals are optional.

More Information

To learn about your spouse beneficiary's options upon inheriting your retirement account, see Naming Your Spouse to Inherit Retirement Accounts. To learn about other beneficiaries' options, see Naming a Non-Spouse Beneficiary for Retirement Accounts.

The book IRAs, 401(k)s & Other Retirement Plans, by Twila Slesnick and John C. Suttle (Nolo), offers a thorough discussion of the rules that govern withdrawals from the most common kinds of retirement plans.

For the rules straight from the IRS, in all their complexity, see Retirement Topics: Required Minimum Distributions (RMDs).

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