Required Minimum Distributions: Age, Deadlines, and the Penalty for Missing One

Tax-deferred accounts don't let you defer forever. At a certain age, the IRS requires you to start taking money out, and missing the deadline is expensive. This is Part 5 of our Retirement Accounts Decoded series, on required minimum distributions, or RMDs.

When RMDs start

Per the IRS, you must take your first required minimum distribution for the year in which you reach age 73, but you can delay that first RMD until April 1 of the following year. Every later RMD is due by December 31. Under SECURE 2.0, the starting age rises to 75 for people born in 1960 or later, according to the final regulations published in the Federal Register. If you were born in 1959, confirm your starting age with a tax professional, since that birth year sits at the boundary.

Delaying the first RMD to April 1 means two RMDs land in the same tax year, which can push you into a higher bracket. The IRS's example: if you reach 73 in 2024, you must take your first RMD by April 1, 2025, and the second by December 31, 2025.

How the amount is calculated

The RMD is generally your account balance at the end of the prior year, divided by a number from the IRS's Uniform Lifetime Table. Publication 590-B shows examples using 26.5 at age 73 and 24.6 at age 75. The divisors for the nearby ages, from the federal regulations, are in the table.

Hypothetical balance, and our arithmetic. The divisor gets smaller each year, so the required percentage rises as you age. Different tables apply in some situations; Publication 590-B has them.

The penalty

If you don't withdraw enough, the amount not withdrawn may be subject to a 25% excise tax, reduced to 10% if you correct the shortfall in a timely way within two years, according to the IRS RMD topic page. On a missed $18,868 RMD, that's $4,717 at 25%, or $1,887 at 10%.

Which accounts have RMDs

• Traditional IRAs, 401(k)s, 403(b)s, and 457(b)s: yes.
• Roth IRAs: no, for the original owner. Publication 590-B says that if you are the original owner of a Roth IRA, you don't have to take distributions regardless of your age.
• Roth accounts in a 401(k) or 403(b): the IRS says the RMD rules do not apply to designated Roth accounts while the owner is alive. Some older IRS pages still say otherwise, so rely on the current RMD FAQ.

An old 401(k) is one more reason to consolidate: RMDs are calculated account by account, and tracking several of them raises the odds of missing one. See our guide on what to do with an old 401(k).

Common questions

At what age do required minimum distributions start?

Age 73 for people who reach 73 now, with the first RMD due by April 1 of the following year if delayed. For people born in 1960 or later, the starting age is 75, per the final regulations.

What is the penalty for missing an RMD?

A 25% excise tax on the amount not withdrawn, reduced to 10% if you correct the shortfall in a timely way within two years, according to the IRS.

Do Roth IRAs have required minimum distributions?

Not for the original owner. The IRS says original Roth IRA owners don't have to take distributions regardless of age, and the RMD rules don't apply to designated Roth accounts in employer plans while the owner is alive.