Required minimum distributions (RMDs) can turn retirement savings into taxable income on a schedule you do not fully control. This guide explains when RMDs generally begin, how to estimate the annual amount, how inherited accounts differ, and how to use a year-end checklist to avoid missed deadlines and unnecessary tax surprises.
Overview
RMDs are annual withdrawals generally required from traditional individual retirement accounts and many employer-sponsored retirement plans. The rules usually apply to traditional IRAs, SEP IRAs, SIMPLE IRAs, 401(k) plans, 403(b) plans, and similar tax-deferred accounts. Withdrawals are generally included in taxable income unless an exception or special treatment applies.
Roth IRAs are different for the original owner: lifetime RMDs generally do not apply while the owner is alive. Employer-plan Roth accounts may have different administrative rules, so confirm the treatment with the plan administrator. Once an account is inherited, however, distribution rules can apply to Roth and traditional accounts alike.
For many people, the central question is: When do I have to take RMDs? Under current federal rules, the applicable starting age depends on your birth year. The general framework is age 73 for many people reaching the applicable threshold under the current rules, with age 75 applying to people born in later years. Because Congress can change these ages, verify your specific starting date before acting.
Your first RMD is generally due by April 1 of the year after the year you reach your applicable starting age. Later RMDs are generally due by December 31 each year. Delaying the first distribution can therefore create two taxable distributions in the same calendar year: the delayed first RMD and the next year's RMD.
How to estimate an RMD
The basic calculation is:
Prior year-end account balance ÷ applicable life-expectancy factor = RMD
Use the account's balance as of December 31 of the previous year. Then divide it by the factor from the IRS life-expectancy table that applies to your situation. The Uniform Lifetime Table is commonly used by account owners, while a different joint-life table may apply when a spouse is the sole beneficiary and is more than 10 years younger. Inherited accounts use separate rules and should not automatically be calculated with the owner's table.
For example, suppose a traditional IRA was worth $400,000 on December 31 of the previous year and the applicable table factor is 25.5. The estimated RMD would be:
$400,000 ÷ 25.5 = approximately $15,686
This is an estimate, not a tax bill. Investment gains or losses during the current year do not normally change that year's calculated RMD, although they will affect the following year's calculation. If you have several accounts, calculate each account separately before determining where the withdrawals will come from.
Many custodians calculate RMDs automatically, but you remain responsible for checking the amount and confirming that the distribution was completed. A custodian's calculation may not include every account you own, particularly accounts held elsewhere or inherited accounts.
Inputs and assumptions
Gather these details before using an RMD calculator or asking a custodian for a calculation:
- Account type: Identify traditional IRAs, SEP IRAs, SIMPLE IRAs, employer plans, Roth accounts, and inherited accounts separately.
- Prior December 31 balance: Obtain an official statement or year-end value for each applicable account.
- Your birth year and age: These determine the starting-age framework and the applicable life-expectancy factor.
- Beneficiary information: A spouse who is the sole beneficiary and is more than 10 years younger can affect the calculation.
- Employment status: Some employer plans may allow a still-working employee to delay RMDs from that current employer's plan, subject to plan terms and applicable rules. This exception generally does not apply in the same way to IRAs or plans from a former employer.
- Inherited-account history: Record the original owner's date of death, your relationship to that person, the account type, and any distributions already taken.
- Tax withholding: Decide whether to withhold federal or state tax from the distribution or make estimated payments separately.
RMDs are usually taxable as ordinary income, although the taxable amount can depend on factors such as after-tax basis in an IRA. Keep records of nondeductible contributions and consult a tax professional if your account has basis or if you are coordinating distributions with Roth conversions.
Worked examples and special cases
Several traditional accounts
Assume you have two traditional IRAs with prior year-end balances of $180,000 and $220,000. If the same life-expectancy factor applies to both accounts, calculate each amount separately and add the results. IRA owners can generally take the combined IRA RMD from one or more traditional IRAs. Employer plans often require more account-specific treatment, so ask each plan administrator whether a distribution from another plan can satisfy that plan's RMD.
Inherited accounts
Inherited-account rules depend on when the owner died, whether the beneficiary is an eligible designated beneficiary, the beneficiary's relationship to the owner, and whether the account is traditional or Roth. The following comparison is a planning guide, not a substitute for an account-specific calculation:
| Situation | What to check |
|---|---|
| Spouse inherits an account | A spouse may have options that differ from those available to a nonspouse beneficiary, including treating the account as their own in some circumstances. |
| Eligible designated beneficiary | Special rules may permit a longer distribution period for certain beneficiaries, such as a surviving spouse, a minor child, a disabled or chronically ill person, or someone not more than 10 years younger than the owner. |
| Other individual beneficiary | A commonly applicable rule requires the account to be emptied within a specified period, often described as a 10-year rule. Whether annual distributions are also required during that period can depend on the owner's RMD status and later IRS guidance. |
| Inherited Roth account | The original owner's lifetime RMD rules do not apply, but beneficiary distribution deadlines can still apply. The account's tax treatment and distribution schedule should be reviewed together. |
Inherited-account rules have changed and have generated detailed administrative guidance. If you inherited an account recently, do not rely on a generic online calculator without confirming the applicable beneficiary category and deadline.
Qualified charitable distributions
If you are eligible, a qualified charitable distribution (QCD) can send money directly from an IRA to a qualifying charity. A QCD may count toward an IRA owner's RMD while generally receiving different tax treatment from a distribution paid to the owner. The payment must follow specific rules, including direct transfer requirements, and annual limits can change. Coordinate the request with the custodian before year-end and retain the confirmation.
When to recalculate: an annual RMD withdrawal checklist
Use this workflow each year, preferably well before December:
- List every applicable account. Include accounts held at different custodians and mark inherited accounts separately.
- Confirm the deadline. Check whether this is your first RMD year, a later year, or a year affected by an inherited-account rule.
- Collect prior year-end balances. Do not estimate from today's account value.
- Confirm the correct table and factor. Review beneficiary, age, employment, and account-type details.
- Calculate and compare. Compare your result with each custodian's RMD notice and resolve differences before withdrawing.
- Choose a tax strategy. Consider withholding, estimated taxes, a QCD if appropriate, and how the withdrawal fits with Social Security taxation, Medicare income-related adjustments, and other taxable income.
- Submit requests early. Custodians may need processing time, especially for QCDs, securities transfers, or year-end transactions.
- Save proof. Keep the calculation, distribution confirmation, withholding record, and charitable receipt with your tax documents.
Recalculate after a major account change, inheritance, rollover, divorce, spouse's death, or change in employment. Revisit the process every year because account balances, tax thresholds, life-expectancy factors, deadlines, and inherited-account guidance can change. Missing an RMD can result in a substantial excise tax, although correction rules may reduce the amount in qualifying circumstances. If a deadline was missed, take corrective action promptly and ask a tax professional how to document the correction.
RMD planning works best as part of broader retirement tax planning. For related decisions, review Roth conversion planning, taxes on Social Security benefits, and the retirement checklist by age.
