Retirement & Tax Planning Answers
What Are Required Minimum Distributions (RMDs)?
Quick answer
RMDs are not optional once they begin. At age 73, the IRS requires annual withdrawals from traditional IRAs, 401(k)s, and other tax-deferred retirement accounts, whether you need the money or not. Each distribution is taxed as ordinary income, and missing part of the required amount can trigger a 25% excise tax on the shortfall.
How to Calculate and Reduce Your RMD
Calculate your Required Minimum Distribution and put the levers in place, Roth conversions and QCDs, that reduce future forced taxable income before age 73.
- 1
Identify your RMD start age
SECURE 2.0 sets the RMD start age at 73 for people born 1951-1959 and 75 for those born in 1960 or later. Your first RMD is due by April 1 of the year after the year you reach that age; every subsequent year's RMD is due by December 31.
- 2
Pull your prior December 31 balance
Pull the closing balance as of December 31 of the prior year from each traditional IRA, 401(k), 403(b), and 457(b) you own. Roth IRAs do not have RMDs during the owner's lifetime; SECURE 2.0 also eliminated lifetime RMDs from Roth 401(k) accounts.
- 3
Look up your divisor in the IRS Uniform Lifetime Table
The divisor at age 73 is 26.5 (about 3.77% of the account). At 80 it is 20.2 (about 4.95%). At 90 it is 12.2 (about 8.2%). The divisor shrinks every year, so the same balance produces a larger required withdrawal as you age.
- 4
Calculate the RMD: balance ÷ divisor
A $2 million traditional IRA at age 73 requires roughly $75,000-$80,000 in the first year. Multiple IRAs can be calculated separately and aggregated for a single distribution; 401(k)s and similar plans must be RMD'd individually from each account.
- 5
Project the trajectory through age 90
Model the RMD year by year against expected growth. A $1.5 million IRA at age 60 growing 6% reaches roughly $3.4 million by age 73, producing a first-year RMD over $125,000 before counting Social Security or other income. The compounded tax exposure is usually larger than retirees expect.
- 6
Shrink the future RMD base with pre-73 Roth conversions
Every dollar converted to Roth before age 73 is permanently removed from the future RMD base. Conversions are most efficient in the low-income gap years between retirement and the first RMD, particularly while in the 12% or 22% bracket and below IRMAA tier thresholds.
- 7
Use QCDs after age 70 1/2 to satisfy RMDs tax-free
Qualified Charitable Distributions (QCDs) allow IRA owners age 70 1/2 and older to give up to $111,000 per year directly to qualified charities. QCDs count toward the RMD but are excluded from taxable income and from MAGI for IRMAA, the most tax-efficient way to satisfy charitable intent in retirement.
- 8
Take the distribution by the December 31 deadline
Schedule the distribution well before year end to avoid the 25% excise tax on shortfalls. The first-year April 1 delay option creates two RMDs in one calendar year. Model the bracket and IRMAA impact before electing it.
RMDs Turn Tax Deferral Into Forced Taxable Income
RMD rules exist because tax deferral was always temporary. Traditional IRAs and 401(k)s let you postpone tax while accumulating assets, but the IRS eventually forces distributions so those dollars become taxable income.
The annual amount is formula-driven: prior December 31 account balance divided by an IRS life-expectancy factor. At age 73, the divisor is about 26.5, which is roughly a 3.8% withdrawal requirement. By age 80, the divisor is around 20.2, or about 5%, so required distributions rise over time even if spending does not.
That progression gets expensive quickly on large balances. A retiree with a $2 million traditional IRA at 73 is looking at an initial RMD of about $75,000 to $80,000. That income stacks on top of Social Security, pension income, capital gains, and other cash flow, which is why many retirees discover their tax picture is much heavier than expected once RMDs arrive.
Recent law changed timing but not the underlying pressure. SECURE 2.0 moved the RMD start age from 72 to 73 for people born 1951 through 1959, and to 75 for those born in 1960 or later (effective 2033). SECURE 2.0 also eliminated pre-death RMDs from Roth assets in employer plans, improving Roth 401(k) planning flexibility.
You cannot eliminate RMDs once they start, but you can reduce their long-term impact. Roth conversions before age 73 shrink the balance subject to future RMDs. QCDs allow IRA owners age 70 1/2 and older to give up to $111,000 directly to qualified charities each year, satisfying part or all of an RMD without adding that amount to taxable income or MAGI. Deliberate pre-RMD withdrawals can also lower future forced distributions by reducing the account base early.
Your Best Chance to Control RMDs Is Before Age 73
If you are 60 to 70 with most of your savings in pre-tax accounts, running a future RMD projection is not optional. A $1.5 million IRA at age 60 growing at 6% with no distributions becomes about $3.4 million by age 73, and the first RMD on that balance is over $125,000 before counting Social Security or other income.
The planning window closes the day your first RMD is due. Every year of intentional Roth conversions, pre-RMD withdrawals, and QCD use starting at 70 1/2 can materially change your long-term tax outcome. The question is not whether RMDs will happen. The question is whether you shaped them before they shaped you.
The RMD Errors That Trigger Unnecessary Taxes and Penalties
- Delaying the first RMD to April 1 of the following year without modeling consequences. That election often creates two RMDs in one calendar year and can spike both tax brackets and IRMAA surcharges.
- Calculating or aggregating RMDs incorrectly across multiple IRAs. Even when the final distribution can come from fewer accounts, the required amount still has to be calculated correctly at the account level first.
- Missing the deadline. Except for the first-year delay option, RMDs are due by December 31 each year, and shortfalls can trigger the 25% excise tax.
IRS Uniform Lifetime Table: RMD Divisors by Age
Divide your prior-year December 31 IRA balance by the divisor for your age to calculate the year's Required Minimum Distribution. The percentage column shows what fraction of the account the divisor implies. SECURE 2.0 sets the RMD start age at 73 for those born 1951-1959 and 75 for those born 1960 or later.
| Age | Uniform Lifetime Divisor | Effective % of Account |
|---|---|---|
| 73 (RMDs begin) | 26.5 | 3.77% |
| 74 | 25.5 | 3.92% |
| 75 | 24.6 | 4.07% |
| 76 | 23.7 | 4.22% |
| 77 | 22.9 | 4.37% |
| 78 | 22.0 | 4.55% |
| 79 | 21.1 | 4.74% |
| 80 | 20.2 | 4.95% |
| 82 | 18.5 | 5.41% |
| 85 | 16.0 | 6.25% |
| 90 | 12.2 | 8.20% |
| 95 | 8.9 | 11.24% |
| 100 | 6.4 | 15.63% |
Source: IRS Publication 590-B, Appendix B (Uniform Lifetime Table) · Verified