RMD stands for Required Minimum Distribution.
It’s the minimum amount you must withdraw each year from certain retirement accounts once you reach a specific age. The IRS requires this so that tax-deferred savings (like in traditional IRAs, 401(k), 403(b), and similar plans) eventually get taxed.
A few key points:
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Starting age:
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If you turned 73 in 2023 or later → your first RMD starts at age 73.
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Starting 2033, the age will move to 75 (per SECURE Act 2.0).
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Which accounts:
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Traditional IRA, SEP IRA, SIMPLE IRA
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401(k), 403(b), 457(b) (unless still working and plan rules allow exemption)
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Roth IRA → no RMDs during the owner’s lifetime
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How it’s calculated:
RMD = Account balance (as of Dec 31 of previous year) ÷ Life expectancy factor (IRS table) -
Deadline:
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First RMD: by April 1 of the year after you hit RMD age.
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After that: by December 31 each year.
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Penalty if you miss:
Previously 50% of the shortfall, but since 2023 it’s generally 25% (and can be reduced to 10% if corrected promptly).
