Required Minimum Distribution (RMD)

Required Minimum Distributions (RMDs) are mandatory withdrawals that must be taken from most tax-deferred retirement accounts starting at a certain age. Failure to take RMDs results in significant penalties.

RMD Age Requirements (SECURE Act 2.0):

Birth Year	RMD Starting Age
1950 or earlier	72
1951-1959	73
1960 or later	75

Accounts Subject to RMDs:

• Traditional IRA
• 401(k), 403(b), 457(b)
• SEP IRA, SIMPLE IRA
• Inherited retirement accounts

Accounts NOT Subject to RMDs:

• Roth IRA (original owner - no RMDs)
• Roth 401(k) (no longer required after 2024)
• Health Savings Accounts (HSA)

RMD Calculation: RMD = Account Balance (Dec 31 prior year) ÷ Life Expectancy Factor

Sample Life Expectancy Factors (Uniform Table):

Age	Factor	RMD % of Balance
73	26.5	~3.77%
75	24.6	~4.07%
80	20.2	~4.95%
85	16.0	~6.25%
90	12.2	~8.20%

RMD Example:

• Age: 75
• Account Balance: $500,000
• Life Expectancy Factor: 24.6
• RMD = $500,000 ÷ 24.6 = $20,325

Penalties for Missing RMDs:

• 25% excise tax on amount not withdrawn (reduced from 50%)
• Can be reduced to 10% if corrected within 2 years

RMD Strategies:

• Take in December for maximum growth, or January for income timing
• Combine multiple IRAs to simplify (take total from one)
• Consider Roth conversions before RMD age
• Qualified Charitable Distributions (QCDs) count toward RMD
• Cannot aggregate RMDs from 401(k)s - each separate

Planning Considerations:

• RMDs increase taxable income
• May push you into higher tax bracket
• Can affect Medicare premiums (IRMAA)
• May cause Social Security taxation