Required Minimum Distribution
A required minimum distribution (RMD) is the amount of money you must withdraw from certain retirement accounts to avoid tax penalties. A specific calculation is used to determine your RMD each year. Starting in 2023, RMDs are required once you turn 73.
- Written by Terry Turner
Terry Turner
Senior Financial Writer and Financial Wellness Facilitator
Terry Turner has more than 35 years of journalism experience, including covering benefits, spending and congressional action on federal programs such as Social Security and Medicare. He is a Certified Financial Wellness Facilitator through the National Wellness Institute and the Foundation for Financial Wellness and a member of the Association for Financial Counseling & Planning Education (AFCPE®).
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Lamia Chowdhury
Lamia Chowdhury
Financial Editor
Lamia Chowdhury is a financial content editor for RetireGuide and has over three years of marketing experience in the finance industry. She has written copy for both digital and print pieces ranging from blogs, radio scripts and search ads to billboards, brochures, mailers and more.
Read More- Published: June 30, 2021
- Updated: August 29, 2023
- 5 min read time
- This page features 8 Cited Research Articles
- Edited By
What Is a RMD?
RMDs are an important part of retirement planning and can influence your overall retirement investing strategy as you get older.
You can’t keep money in a tax-deferred retirement account forever. The Internal Revenue Service has specific rules against it, and you can face penalties for breaking or ignoring those rules.
In 2022, you had to take RMDs by 72. Because of the SECURE 2.0 Act, 2023 saw the RMD age rise to the year you turn 73. This allows you to keep your money tucked away for longer in your IRAs and 401(k)s to allow your savings to grow without being taxed. By 2033, the RMD age will rise to 75, according to the IRS.
Roth IRAs do not have RMDs until after the owner’s death. However, this rule changes in 2024. Starting then, the IRS won’t require RMDs from Roth IRAs.
How To Calculate RMD
To calculate your RMD for this year, divide your account balance at the end of last year by the IRS life expectancy factor that corresponds to your age.
There are two different IRS life expectancy tables to use depending on your situation. For reference, most people use the Uniform Lifetime Table.
| Joint Life and Last Survivor Table | Use this table if you’re married and your spouse is more than 10 years younger than you are and is the sole beneficiary of your account. |
| Uniform Lifetime Table | Use this table if you’re single, married to someone who isn’t more than 10 years younger than you are or married but your spouse is not the sole beneficiary of your account. |
You’ll use the same formula to calculate RMDs if your spouse is the sole beneficiary of your account and is more than 10 years younger than you are. However, the life expectancy factors are different.
Required Minimum Distribution Tables 2023
| Age | Life Expectancy Factor |
|---|---|
| 72 | 27.4 |
| 75 | 24.6 |
| 80 | 20.2 |
| 85 | 16.0 |
| 90 | 12.2 |
| 95 | 8.9 |
| 100 | 6.4 |
| Your Age | ||||||||
| Your Spouse's Age | 70 | 71 | 72 | 73 | 74 | 75 | 76 | 77 |
| 45 | 41.5 | 41.5 | 41.4 | 41.4 | 41.3 | 41.3 | 41.2 | 41.2 |
| 46 | 40.6 | 40/6 | 40.5 | 40.5 | 40.4 | 40.4 | 40.3 | 40.3 |
| 47 | 39.7 | 39.7 | 39.6 | 39.5 | 39.5 | 39.4 | 39.4 | 39.3 |
| 48 | 38.8 | 38.8 | 38.7 | 38.6 | 38.6 | 38.5 | 38.5 | 38.4 |
| 49 | 38 | 37.9 | 37.8 | 37.7 | 37.7 | 37.6 | 37.5 | 37.5 |
| 50 | 37.1 | 37 | 36.9 | 36.8 | 36.8 | 36.7 | 36.6 | 36.6 |
| 51 | 36.2 | 36.1 | 36 | 36 | 35.9 | 35.8 | 35.7 | 35.7 |
| 52 | 35.4 | 35.3 | 35.2 | 35.1 | 35 | 34.9 | 34.9 | 34.8 |
| 53 | 34.6 | 34.5 | 34.3 | 34.2 | 34.1 | 34.1 | 34 | 33.9 |
| 54 | 33.8 | 33.6 | 33.5 | 33.4 | 33.3 | 33.2 | 33.1 | 33 |
| 55 | 33 | 32.8 | 32.7 | 32.6 | 32.4 | 32.4 | 32.2 | 32.2 |
RMD Rules & Requirements
You must take your RMDs in a timely manner when you turn 73.
The new rule for 2023 requires you to take your RMDs at 73 instead of 72. You’re allowed to withdraw more than the minimum the account requires, but consult with a financial advisor before doing so.
If you turn 73 in 2023, you are still subject to the age 72 RMD rule. This means your first RMD is due by April 1, 2023, and your second RMD is due by Dec. 31, 2023.
If you turn 72 in 2023, your first RMD date moves to April 1, 2025, which accounts for 2024.
There are also different rules and requirements for RMDs on multiple accounts and inherited IRAs. Consider the various requirements before withdrawing money.
RMD Rules for Multiple Accounts
If you have more than one retirement account that is subject to RMDs, you’ll need to calculate the distribution for each account separately.
There’s an exception for IRAs. In this case, the IRS allows you to take your total IRA RMD from just one IRA account.
The same rule applies if you have more than one 403(b) plan.
But if you own more than one 401(k) or 457(b) plan, you must pull an RMD from each account separately.
Inherited IRA RMD Rules
Your RMD calculation is different if you inherited an IRA.
To determine your distribution method, you’ll need the date of death or the original IRA owner and the type of beneficiary you were. If the original owner of the IRA had an RMD due the year of their death, you’re now responsible for handling that RMD.
If you’re not a spouse, you typically have 10 years to empty the account, according to the IRS. Spouses have more flexibility and can become the account owner.
If you will inherit a Roth IRA, note that RMDs are no longer required starting in 2024.
Strategies for Minimizing Taxes & Penalties on RMDs
There are four key strategies to minimize your taxes and potential RMD penalties.
- Take your RMD distributions early.
- According to Kiplinger, it can take time for your IRA or 401(k) to process your RMD request. If you wait until the last minute, you could miss the deadline.
- Have a financial expert double-check your math.
- Calculating your RMDs can be complex. If you accidentally withdraw the wrong amount or miss the deadline, there are costly consequences.
- Avoid spreading out your RMDs.
- The IRS gives you the option to delay your first RMD until April 1 the year after you turn 72 (or 73 if turning that age in 2023). But if you wait until then, you’re required to take another RMD less than nine months later, by Dec. 1. If your RMDs are large, this could bump you into a higher tax bracket the following year.
- Automate your RMDs.
- To guarantee you won’t miss the deadline, you can request for RMDs to automatically be taken out of your account once you’ve calculated the amount and had it verified by an expert.
If you miss the deadline or don’t withdraw the correct amount, you’ll face an IRS penalty. Because of the SECURE 2.0 Act, starting in 2023 the penalty is a 25% excise tax on the amount not distributed.
For example, if you were required to withdraw $10,000 but only took out $6,000, you’d owe a $1,000 penalty (25% of the $4,000 difference), plus income tax on the shortfall.
If you get hit with the 25% IRS penalty, you can ask the IRS to waive it. The IRS may waive the penalty, and the penalty could be reduced to 10% if you correct the RMD within two years.
Required Minimum Distributions FAQs
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8 Cited Research Articles
- Reed, E. (2023, March 8). At What Age Do RMDs Stop? Retrieved from https://www.nasdaq.com/articles/at-what-age-do-rmds-stop
- Brandon, E. (2023, February 10). New RMD Rules for 2023. Retrieved from https://money.usnews.com/money/retirement/401ks/articles/new-rmd-rules-for-2023
- Internal Revenue Service. (2023). Retirement Topics — Required Minimum Distributions (RMDs). Retrieved from https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-required-minimum-distributions-rmds
- Internal Revenue Service. (2023). Retirement Plan and IRA Required Minimum Distributions FAQs. Retrieved from https://www.irs.gov/retirement-plans/retirement-plan-and-ira-required-minimum-distributions-faqs
- Internal Revenue Service. (2022, December 12). IRS Reminds Those Over Age 72 To Start Withdrawals from IRAs and Retirement Plans To Avoid Penalties. Retrieved from https://www.irs.gov/newsroom/irs-reminds-those-over-age-72-to-start-withdrawals-from-iras-and-retirement-plans-to-avoid-penalties
- The U.S. Senate Committee on Finance. (2022). SECURE 2.0 Act of 2022. Retrieved from https://www.finance.senate.gov/imo/media/doc/Secure%202.0_Section%20by%20Section%20Summary%2012-19-22%20FINAL.pdf
- Internal Revenue Service. (2022). Publication 590-B (2022), Distributions from Individual Retirement Arrangements (IRAs). Retrieved from https://www.irs.gov/publications/p590b
- Internal Revenue Service. (n.d.). RMD Comparison Chart (IRAs vs. Defined Contribution Plans). Retrieved from https://www.irs.gov/retirement-plans/rmd-comparison-chart-iras-vs-defined-contribution-plans
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