GLOSSARY DEEP DIVE

Required Minimum Distribution: The Withdrawal the IRS Does Not Let You Skip

Decades of deliberately deferring taxes on a traditional IRA or 401(k) come with a catch: the government eventually wants its share, whether or not you actually need the money that year. A required minimum distribution, commonly shortened to RMD, is the mechanism that forces that reckoning, and missing one is punished more severely than almost any other retirement account mistake.

Deep dive11 min readUpdated 2026
In this article

The core principle

A required minimum distribution (RMD) is the minimum amount the IRS requires an account owner to withdraw each year from tax-deferred retirement accounts, including traditional IRAs, 401(k)s, 403(b)s, and most other employer plans, once the owner reaches a specified age. For many people currently retired, that age is 73; legislation already enacted pushes the starting age to 75 later this decade for younger cohorts, so the exact trigger age depends on birth year. The rule exists because traditional accounts were funded with pre-tax dollars specifically in exchange for a promise that the money would eventually be taxed as ordinary income, and that promise cannot be deferred indefinitely.

The mechanics are formulaic, not discretionary. Each year, the RMD is calculated by taking the account balance as of December 31 of the prior year and dividing it by a life expectancy factor published in IRS tables, primarily the Uniform Lifetime Table, which shortens as the owner ages. A larger balance or a shorter remaining life expectancy factor both push the required withdrawal higher in dollar terms, even though the account holder has no discretion over whether to take it. Roth IRAs owned by the original account holder are exempt from RMDs entirely during that owner's lifetime, one of the structural advantages Roth accounts hold over traditional ones, though inherited Roth IRAs held by most non spouse beneficiaries are not exempt from distribution rules.

Key idea An RMD is not a suggestion or a planning target: it is the floor, not the ceiling. You can withdraw more than the required amount in any year, but withdrawing less than required triggers an excise tax penalty on the shortfall, currently set at 25% of the amount not withdrawn on time, reducible to 10% if corrected within a defined correction window.

How the math works

Example 1: calculating a first year RMD. Suppose a retiree turns 73 this year and her traditional IRA balance was $640,000 as of December 31 of the prior year. Under the Uniform Lifetime Table, the life expectancy factor at age 73 is 26.5. The RMD is calculated as account balance divided by life expectancy factor, so $640,000 / 26.5 ≈ $24,151. She must withdraw at least $24,151 from that account during the year (the first RMD can be delayed until April 1 of the following year, though doing so forces two distributions to be taxed in that second year). That $24,151 is added to her ordinary taxable income for the year regardless of whether she spends it or simply moves it into a taxable brokerage account.

Example 2: how the required withdrawal grows as the factor shrinks. Assume the same retiree's IRA grows modestly over the following years, and by age 80 her balance stands at $610,000 after several years of withdrawals partly offset by market gains. The life expectancy factor at age 80 is 20.2, noticeably shorter than at 73. Her RMD that year is $610,000 / 20.2 ≈ $30,198, a larger required withdrawal in dollar terms even though the account balance is lower than it was seven years earlier, purely because the shrinking factor divides into the balance more aggressively as she ages. This is precisely why RMDs tend to represent a growing percentage of a tax-deferred account balance each year, independent of investment performance.

Key idea Because the life expectancy factor shrinks every year while the account balance can still be growing from investment returns, the dollar amount of a required minimum distribution typically rises over time, often pushing retirees into a higher marginal tax bracket in their late 70s and 80s than they experienced in their late 60s, an outcome that catches many people off guard.

How it shows up in real portfolios

The most common real-world friction with RMDs shows up for retirees who delayed Social Security to age 70 and also built a large traditional 401(k) or IRA balance over a long career. By the time RMDs begin, the combination of Social Security income and a sizable required withdrawal can push total taxable income well above what the retiree actually needs to live on, generating a tax bill on money that is simply being shuffled from one account to another rather than spent. Some retirees respond by using a qualified charitable distribution, which allows a direct transfer from an IRA to a qualified charity to count toward the RMD while being excluded from taxable income entirely, a materially better outcome than taking the distribution and then donating the after-tax proceeds.

A relevant scenario for a high-earning professional: a retired physician with a $2.1 million traditional 401(k) rolled into an IRA reaches age 73 with essentially no other income need, having built a separate taxable brokerage account and a paid-off home over a long career. Her first year RMD alone, using the same 26.5 factor, is roughly $2,100,000 / 26.5 ≈ $79,245, an amount that lands almost entirely in higher marginal brackets since she has little other deductible income to absorb it, and that also raises her Medicare Part B and Part D premiums through the IRMAA surcharge two years later because of how that surcharge is calculated off prior tax returns. Physicians and other high earners in this position frequently benefit from doing partial Roth conversions during lower-income years, such as between retirement and the start of RMDs, specifically to shrink the traditional balance that will eventually force these large required withdrawals.

Multiple accounts add a wrinkle worth knowing: RMDs from multiple traditional IRAs can be aggregated and withdrawn from any single IRA or combination of IRAs, but RMDs from 401(k) or 403(b) plans generally must be calculated and withdrawn separately from each individual employer plan, not aggregated the way IRAs can be. Retirees who hold several old 401(k)s from prior employers, rather than consolidating them into a single rollover IRA, often discover this rule only after an RMD deadline has already passed for one specific plan.

Inherited accounts add yet another layer of complexity that catches many beneficiaries off guard. Under current distribution rules, most non spouse beneficiaries who inherit a traditional IRA or 401(k) must empty the entire account within 10 years of the original owner's death, and if the original owner had already started taking RMDs before dying, annual withdrawals may also be required throughout that 10 year window, not just a single lump sum at the end. A beneficiary who inherits a $500,000 traditional IRA and simply lets it sit untouched for nine years, planning to withdraw it all in year ten, can end up facing a single enormous taxable distribution that pushes an entire year of income into the highest marginal brackets, when spreading withdrawals more evenly across the full 10 year window, even without a strict annual requirement, would have kept each year's taxable income lower and the total lifetime tax bill smaller.

Actionable breakdown

  • Know your specific RMD starting age based on your birth year.
  • Calculate each account's RMD separately using the correct IRS table.
  • Aggregate IRA withdrawals if convenient; do not aggregate 401(k) RMDs.
  • Consider a qualified charitable distribution if you give to charity anyway.
  • Model Roth conversions in low-income years before RMDs begin.
  • Set the withdrawal to occur automatically to avoid missing the deadline.
  • Account for the RMD's effect on Medicare IRMAA surcharges two years out.
  • Consolidate old employer plans into a single IRA if it simplifies tracking.
  • Spread inherited account withdrawals evenly across the 10 year window.
  • Confirm whether an inherited account also carries an annual RMD requirement.

Common pitfalls

  • Missing the annual deadline and incurring the excise tax penalty on the shortfall, a mechanical error that is entirely avoidable with automation.
  • Assuming 401(k) RMDs can be aggregated across employer plans the way IRA RMDs can, and under-withdrawing from one specific plan as a result.
  • Failing to plan around the tax bracket jump RMDs can cause, especially when combined with delayed Social Security income starting around the same age.
  • Overlooking that the first RMD can be delayed to April 1 of the following year, which then stacks two taxable distributions into a single tax year.

For the account type that avoids this rule entirely, see Roth IRA. For the strategy many retirees use to shrink future RMDs, see Roth conversion. For the giving strategy that offsets an RMD, see qualified charitable distribution. For the account type most affected, see IRA. For fuller context, see the guides on retirement accounts and withdrawal strategies.

The bottom line

A required minimum distribution is a fixed, formulaic withdrawal the IRS enforces on tax-deferred accounts starting at a set age, and the only real planning lever available is shrinking the taxable balance ahead of time through strategies like Roth conversions or timed charitable giving.

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