Article
Required Minimum Distributions (RMDs)
Investment Money You Must Take
Required Minimum Distributions (RMDs) are annual withdrawals you must take from traditional IRAs, SEP IRAs, SIMPLE IRAs, and employer-sponsored retirement plans (like 401(k)s and 403(b)s) starting at age 75 if you were born in 1960 or later, age 73 if you were born in 1951 through 1959, or age 72 or 70½ if you were born in 1950 or earlier.
RMDs are mandatory because the IRS wants to ensure that people don't accumulate retirement funds indefinitely and avoid taxes on those funds, which are contributed pre-tax. RMDs are designed to ensure that a portion of these tax-deferred savings is withdrawn and taxed during the account owner's lifetime.
Generally, you must begin taking RMDs by a specific age. However, if you are a 5% owner of the business sponsoring the plan, you must begin taking RMDs once you reach age 73, even if you are still working.
RMDs apply to traditional IRAs (including SEP and SIMPLE IRAs), 401(k)s, 403(b)s and other employer-sponsored retirement plans. They also apply to qualified annuities.
Roth IRAs are exempt from RMDs, as are certain beneficiaries of Roth IRAs. Also, most non-qualified products are exempt.
The RMD is calculated by dividing the value of your retirement account (as of December 31 of the previous year) by a factor based on your life expectancy, as determined by the IRS.
You could face a 25% excise tax on the amount not distributed as required if you fail to take RMDs on time.
Your first RMD must be taken by April 1 of the year after you reach age 73. Subsequent RMDs must be taken by December 31 of each year.
Page Last Updated: 15 June 2025
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