Required Minimum Distributions (RMDs) Explained

What happens to a $500,000 traditional IRA when its owner turns 73? The IRS requires a withdrawal of at least $18,867.92 that year. That amount is the required minimum distribution, or RMD. It comes from one division: last year-end balance over an IRS life expectancy factor. This guide shows the factors, the deadlines, and the cost of missing one.

RMD Quick Reference: Factors and Amounts by Age

The table below pairs each age with its IRS distribution period. It also shows the share of the balance you must take and the RMD on a $500,000 account.

Read the table in two ways. The distribution period shrinks every year, so the required share of your balance rises. At 73 you take about 1 dollar in 27, while at 90 you take about 1 dollar in 12.

The dollar column assumes the balance stays at $500,000 each year. Real balances rise or fall with markets and past withdrawals. Always use your own December 31 balance from the prior year.

What Is a Required Minimum Distribution?

An RMD is the smallest amount the IRS makes you withdraw each year from most tax-deferred retirement accounts. It starts at age 73 and continues for life.

These accounts let savings grow for decades without yearly tax. RMDs are how that deferred money finally reaches your taxable income. You may always take more than the minimum, but never less without a penalty.

The rule covers traditional IRAs, SEP IRAs, SIMPLE IRAs, and workplace plans such as 401(k), 403(b), and 457(b) plans. Profit-sharing plans are covered too. Roth IRAs are the big exception while the original owner is alive.

Required beginning date

The deadline for your first RMD: April 1 of the year after you reach 73.

Distribution period

The IRS life expectancy factor for your age. You divide your balance by it.

Uniform Lifetime Table

Table III in IRS Publication 590-B. Most account owners use it to find their factor.

Joint Life Table

Table II in the same publication. It applies when your spouse is your sole beneficiary and more than 10 years younger.

Excise tax

The penalty on any part of a required withdrawal you did not take on time.

How Is an RMD Calculated?

Divide the account balance on December 31 of the prior year by your distribution period. The result is your required minimum for the current year.

Here is a second check. A $200,000 balance at age 75 uses a factor of 24.6. Dividing gives an RMD of $8,130.08 for that year.

You figure the RMD separately for each traditional IRA. The IRS then lets you add those amounts and take the total from one or more of the IRAs. Say you hold $300,000 and $200,000 in two IRAs at 73. The separate RMDs are $11,320.75 and $7,547.17, for a combined $18,867.92.

Workplace plans work differently. RMDs from 401(k) and 457(b) plans must come separately from each plan account. The RMD calculator for your age and balance handles the factor lookup, the spouse option, and a year-by-year projection.

When Do RMDs Start and When Are They Due?

RMDs start the year you reach 73. The first one is due by April 1 of the next year, and every later one is due by December 31.

The Two-Withdrawal Year

Delaying the first RMD to April 1 has a catch. The second RMD is still due by December 31 of that same year. The IRS shows this with an owner who reaches 73 in 2024 and takes RMDs by April 1, 2025, and December 31, 2025.

Two withdrawals in one calendar year can push more income into a higher tax bracket. Taking the first RMD during the year you turn 73 spreads that income across two tax years. Compare both options with a tax professional before you choose.

The Still-Working Rule

Workplace plans may let you delay RMDs until the year you retire. This applies only when the plan allows it. It does not apply to anyone who owns more than 5 percent of the business sponsoring the plan.

The still-working rule covers only the current employer’s plan. Traditional IRAs still require RMDs from age 73, even while you hold a job.

Roth Accounts

Original owners of Roth IRAs never face RMDs. Designated Roth accounts inside a 401(k) or 403(b) plan are also exempt while the owner is alive. Beneficiaries who inherit these accounts follow separate rules.

What Happens When You Miss an RMD?

The IRS charges a 25 percent excise tax on the amount you failed to withdraw. The rate drops to 10 percent when you correct the shortfall within the two-year correction window.

The penalty applies only to the shortfall, not the whole balance. Suppose you needed $18,867.92 but withdrew $10,000. The tax then applies to the missing $8,867.92.

The excise tax is reported on IRS Form 5329. The regular income tax on the withdrawal is still owed as well. Treat the penalty as a separate cost stacked on top of normal tax.

Your custodian may calculate the RMD, but the IRS holds the account owner responsible for the correct amount. Set a calendar reminder for early December, not December 31. Extra withdrawals this year also do not count toward next year’s RMD.

How Do RMDs Fit Into a Retirement Withdrawal Plan?

RMDs set a floor on withdrawals, not a spending target. Your plan still decides how much you spend, save, or reinvest after tax.

Many retirees plan spending around the 4 percent rule for retirement withdrawals. On a $500,000 account, 4 percent is $20,000 a year. The RMD at 73 is lower, at $18,867.92, so the rule already covers it.

From age 75 onward, the RMD share exceeds 4 percent. You must withdraw the larger amount, but you do not have to spend it. Money you do not need can move into a taxable brokerage or savings account after tax.

Bigger balances mean bigger RMDs and bigger tax bills later. A $1,000,000 IRA at 73 requires $37,735.85 in one year. Checking your progress with retirement savings benchmarks by age helps you see that coming years ahead.

Questions People Ask About RMDs

Where These Numbers Come From

This article is general education on how RMDs are calculated, not tax or investment advice. Confirm your own figures with the IRS and a qualified tax professional. Reviewed for accuracy by Prof. Dr. Khalil Mudassar, PhD. Last updated September 27, 2026.