Here is a scene I have watched play out more than once. Someone turns 73, a few years into a comfortable retirement, having barely touched the traditional 401k they spent three decades filling. The plan was simple: leave it alone, let it keep growing, treat it as the emergency cushion. Then the calendar does something they did not budget for.
The government wants its share, and it has waited long enough. The money in a traditional retirement account went in without being taxed, grew without being taxed, and at some point the tax bill comes due whether you need the cash or not. That mechanism is called a required minimum distribution, or RMD, and it surprises far more people than it should.
None of this is a reason to panic. Once you see how the pieces fit, an RMD is just a yearly chore with a clear formula and a firm deadline. Let me walk you through what it is, when it lands, and how to handle it without handing the IRS extra money.
What a required minimum distribution actually is
An RMD is the smallest amount you are legally required to withdraw from certain retirement accounts each year once you reach a set age. The account itself does not force a sale of anything specific. It simply says a minimum dollar figure has to leave the account by December 31.
The logic traces back to the deal you struck decades earlier. Traditional accounts run on tax deferral, the same tax-deferred structure that makes a 401k work so well during your career. You skipped the tax on the way in, so the rules eventually pull the money out and tax it on the way through.
Roth accounts are the exception, because you already paid the tax up front. We will get to which accounts escape RMDs in a moment.
The age the clock starts, and the one deadline people miss
Under current law, RMDs begin the year you turn 73. That age is scheduled to move to 75 in 2033, so anyone still a decade or more from retirement should expect the target to keep shifting.
Most years the deadline is clean: take the full amount by December 31. The trap sits in the very first year.
The first-year April 1 quirk
For your first RMD only, you get an extension. You can wait until April 1 of the year after you turn 73. Sounds generous, and it can backfire.
How the number gets calculated
The math is less intimidating than it looks. You take the account balance as of December 31 of the prior year and divide it by a life expectancy factor published by the IRS in its Uniform Lifetime Table.
Say your traditional accounts held $500,000 at the close of last year. At age 73, the table uses a factor of 26.5. Divide 500,000 by 26.5 and you land around $18,900. That is the minimum you must withdraw for the year.
The factor shrinks a little each year as you age, so the required percentage slowly climbs. Your custodian will usually calculate the figure for you, but the responsibility for taking it is always yours.
An RMD is a floor, not a ceiling. You can always take out more if you need it. The rule only cares that you do not take out less than the required amount.
Which accounts count, and which get a pass
Not every retirement account plays by the same rules, and knowing the difference can save you a real headache. Traditional IRAs and workplace plans are squarely in scope. Roth accounts get treated far more gently.
There is also a wrinkle worth knowing if you consolidated old plans. When you roll an old 401k into an IRA, that balance follows IRA rules, which lets you satisfy the RMD across all your IRAs from a single account. Workplace plans do not offer that flexibility.
| Account type | RMDs during your lifetime? | Notes |
|---|---|---|
| Traditional IRA, SEP, SIMPLE IRA | Yes | Begins at 73. You may total the RMD across IRAs and pull it from one. |
| Traditional 401k, 403b, 457b | Yes | Calculated and taken from each plan separately. A still-working exception may apply. |
| Roth IRA | No | No RMDs while the original owner is alive. |
| Roth 401k | No | Lifetime RMDs were removed starting in 2024. |
| Inherited accounts | Usually yes | Different rulebook, often a 10-year drawdown window. |
One useful exception: if you are still working past 73 and do not own more than 5 percent of the company, you can generally delay RMDs from that employer's plan until you actually retire. That break applies to the current employer's 401k, not to IRAs.
What happens if you miss it
This is the part that keeps people up at night, and honestly it used to be brutal. For years, failing to take an RMD triggered a penalty of 50 percent of the amount you should have withdrawn. That is not a typo.
The fix, when a miss happens, is to withdraw the missed amount as soon as you catch it and file Form 5329 with a short explanation. The IRS has been known to waive the penalty for a reasonable, corrected error. Do not count on grace, but do not assume all is lost either.
Smart ways to handle money you are forced to take
Being required to withdraw does not mean being required to spend. If you do not need the cash, the withdrawal can move straight into a regular taxable brokerage account and keep working for you. You pay the tax, then reinvest what is left.
Retirees who built their spending plan around the four percent rule sometimes find their RMD runs higher than the amount they intended to spend. That is fine. The RMD sets a tax floor, while your own withdrawal strategy sets your lifestyle. The two do not have to match.
If you give to charity, look into a qualified charitable distribution. Starting at age 70 and a half, you can send money directly from an IRA to a qualified charity. It can count toward your RMD and stays off your taxable income, with an annual limit that sits a bit above $100,000. For the charitably inclined, that is one of the cleaner moves available.
The short version: RMDs start at 73, get calculated from last year's balance divided by an IRS factor, and must clear by December 31 (April 1 the first year only). Roth accounts skip them. Miss one and the penalty is 25 percent, or 10 percent if you fix it fast.
Planning ahead beats reacting
The retirees who handle RMDs calmly are the ones who saw them coming years out. Some convert slices of a traditional IRA to a Roth during lower-income years in their 60s, shrinking the future balance that RMDs will draw from. Others simply mark the deadline and take the distribution every January without drama.
There is no single right answer, and your numbers will not look like your neighbor's. A short conversation with a tax professional before your first RMD year is usually money well spent, especially if your balances are large enough to affect your bracket.
Do I have to take an RMD from my Roth IRA?
No. Roth IRAs carry no required distributions during the original owner's lifetime, since the tax was already paid. Inherited Roth accounts follow their own separate rules.
Can I take my RMD in monthly pieces instead of one lump sum?
Yes. The IRS only cares that the full required amount leaves the account by the deadline. Whether you take it monthly, quarterly, or in a single withdrawal is entirely up to you.
What if I am still working at 73?
If you do not own more than 5 percent of the company, you can usually delay RMDs from that current employer's plan until you retire. This does not apply to IRAs or to old plans from former employers.
Required minimum distributions feel like a curveball only because nobody warns you about them until they arrive. Learn the age, learn the deadline, and keep a rough eye on your balances, and the whole thing becomes a footnote in your year rather than a scramble. Take care of the December date, and let the rest of your retirement plan do its quiet work.
