What Is a Required Minimum Distribution (RMD)?
A required minimum distribution is the minimum amount the IRS requires you to withdraw each year from tax-deferred retirement accounts — traditional IRAs, 401(k)s, 403(b)s, SEP IRAs, and SIMPLE IRAs. The government allowed you to defer taxes on contributions and earnings for decades, and RMDs are the mechanism by which those deferred taxes are collected. Failing to take your full RMD by December 31 (or April 1 for the year you first become subject to RMDs) results in a 25% excise tax on the shortfall — reduced to 10% if corrected within two years.
The SECURE 2.0 Act of 2022 changed the RMD starting age to 73 for people born between 1951 and 1959, and to 75 for those born in 1960 or later. If you turned 72 before 2023, the old rules applied and you were already required to take RMDs. Roth IRAs are not subject to RMDs during the account owner's lifetime — one of their key advantages over traditional IRAs for estate planning purposes.
How the IRS Calculates Your RMD
The IRS calculates RMDs using your prior December 31 account balance divided by a life expectancy factor from the Uniform Lifetime Table (Publication 590-B). This table was updated in 2022 to reflect longer life expectancies, which reduced RMDs by roughly 6-7% compared to the old table. For example, at age 75, the distribution factor is 24.6, meaning your RMD is 1/24.6th of your account balance (approximately 4.07%). At age 80, the factor drops to 20.2, requiring a larger withdrawal of about 4.95% of the prior year-end balance.
If your sole beneficiary is a spouse more than 10 years younger than you, you may use the more favorable Joint Life and Last Survivor Table, which produces lower RMDs based on both life expectancies. This is the only situation where a different table applies for account owners — all other beneficiary situations use the Uniform Lifetime Table. If you have multiple retirement accounts, you calculate the RMD separately for each but can aggregate traditional IRAs and take the combined RMD from any one IRA account.
RMD Strategy: Managing the Tax Impact
RMDs are taxed as ordinary income and can push retirees into higher tax brackets, trigger Medicare IRMAA surcharges (income-related monthly adjustment amounts) on Parts B and D premiums, cause Social Security benefits to become taxable, and reduce eligibility for other income-based benefits. Proactive strategies to manage RMD impact include Roth conversions in the years between retirement and age 73 — converting traditional IRA funds to Roth while in a lower bracket reduces future required distributions significantly.
Qualified Charitable Distributions (QCDs) are another powerful tool: taxpayers 70½ or older can donate up to $105,000 per year directly from an IRA to a qualifying charity. The distribution counts toward your RMD but is excluded from taxable income — unlike a regular withdrawal followed by a charitable deduction. For charitably inclined retirees in the 22-24% bracket, QCDs can save thousands in taxes annually while satisfying philanthropic goals. Taking RMDs in January gives you maximum investment growth time for the year, while taking them in December gives you an accurate picture of the full year's income before deciding on the amount to withdraw above the minimum.