Retirement
required minimum distribution
A required minimum distribution, or RMD, is the least you must withdraw each year from most pre-tax retirement accounts once you reach the starting age the IRS sets.
A required minimum distribution (RMD) is the minimum you must withdraw each year from your traditional IRA and most workplace retirement accounts. The IRS page says you generally must start when you reach age 73. Check the current rule for your birth year, because Congress has changed the age before.
How it works. The IRS divides your account balance on the prior December 31 by a life expectancy factor. Withdrawals count as taxable income, except any part that was already taxed. Roth IRAs have no RMD while the owner is alive.
The cost of a miss. If you do not take the full amount, the IRS says the shortfall may face an excise tax of 25%, or 10% if you fix it within two years.
A round example. For example, if your factor were 25 and your balance were $500,000, your RMD would be $20,000. Real factors come from IRS tables.
Why it matters to your giving. RMDs raise taxable income and can affect Medicare premiums. They also open giving options. See our retirement income guide.
Related terms
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