Required Minimum Distributions Explained (RMDs)

By Alamzeb Khan · Updated August 2026 · 7 min read · RMD Calculator →

The rule in one sentence

From the year you turn 73, the government requires you to take money out of your retirement accounts every year and pay income tax on it - whether you need the money or not.

That is the whole idea. The tax was deferred, not forgiven, and this is when it comes due.

How much, and why it keeps rising

The amount is your balance divided by a factor the IRS publishes for your age. The factor is roughly how many years they expect the money to last, so it shrinks every year - which means the percentage you must withdraw climbs.

On a $500,000 balance, from the RMD calculator:

This is worth sitting with. The requirement nearly triples as a share of the balance between 73 and 95. Someone planning around “about 4% a year” will be badly wrong by their late eighties.

The pot does not necessarily shrink

Here is something people find surprising. Starting at 73 with $500,000 growing at 5%, taking every required withdrawal for twelve years:

• Total taken out: $291,430
• Balance still remaining: $501,948

You have withdrawn nearly $300,000 and the account is almost exactly where it started. Early on, growth outpaces the withdrawal. The requirement is not designed to drain the account quickly - it is designed to make sure the tax eventually gets paid.

That matters for planning: these withdrawals are a tax event long before they are a balance problem.

The first-year trap

Your first withdrawal has a special deadline: April 1 of the year after you turn 73. Every one after that is due by December 31.

That extra few months looks like a gift. It is often the opposite.

If you delay your first withdrawal into the following April, you still have to take that year’s withdrawal by its own December deadline. So two withdrawals land in the same tax year:

That is $19,645 of extra income crammed into one year. Enough to push you into a higher tax band, and enough to cross a Medicare income line and trigger a surcharge two years later - see the IRMAA calculator for what that costs.

Delaying is occasionally right, usually when you know the following year’s income will be unusually low. It is rarely right by accident.

Missing one is expensive, and fixable

The penalty for taking too little is 25% of the shortfall. Miss a $20,000 withdrawal and that is $5,000, on top of the tax you owed anyway.

But if you notice and correct it quickly, the penalty drops to 10% - $2,000 on the same shortfall.

That difference is entirely about how fast you spot it. Which is a strong argument for checking every year rather than assuming your provider has handled it.

Two rules people get wrong

IRAs can be added together. Workplace plans mostly cannot.

Work out the required amount for each IRA, add them up, and take the total from whichever IRA you prefer. That flexibility is genuinely useful.

A 401(k) does not work that way. Each plan generally needs its own withdrawal, taken from that specific plan. Someone with two old 401(k)s who takes both amounts from one of them has satisfied one requirement and missed the other - and will find out via a penalty.

A Roth is exempt while you are alive.

Neither a Roth IRA nor a designated Roth account in a workplace plan forces a withdrawal from its owner. It is the only retirement money nobody makes you spend.

This is a real and often overlooked argument for converting some money to a Roth before 73 - it shrinks the balance that will later be forced out and taxed. The Roth conversion calculator shows what a conversion costs now against what it saves later.

What to do about it

1. Know your first deadline. April 1 of the year after you turn 73 - and understand what delaying does to that year’s tax.
2. Check each account separately if you have workplace plans. Adding them together is only allowed for IRAs.
3. Look at converting to a Roth before 73, especially in a low-income year. It reduces what gets forced out later.
4. Watch the Medicare line. A large withdrawal reaches forward two years and can raise your premiums.
5. Check it every year. The penalty for missing is 25%, but 10% if you catch it fast.

Work out your own figures in the RMD calculator - it uses the IRS life expectancy table, shows the first-year choice side by side, and works out what a missed withdrawal would cost.

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