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Required Minimum Distributions Explained
Reach age 73 with $1.2 million in a traditional 401(k) and the IRS schedules a withdrawal of roughly $46,200 that year — whether you need it or not. Skip it and the penalty is 25% of the missed amount, one of the harshest in the tax code. RMDs are the mechanism that finally collects the deferred tax.
The Current Rules
SECURE 2.0 set the starting age at 73 for anyone born 1951-1959, rising to 75 for those born in 1960 or later. Each year's required amount is the prior December 31 balance divided by an IRS life-expectancy factor. At 73 the divisor is about 26.5, so a $1.2 million balance yields roughly $45,000; the divisor shrinks every year, so the required percentage climbs — around 3.8% at 73 and past 5% by 80.
The first RMD can be delayed to April 1 of the year after turning 73, but delaying means two distributions land in one tax year, often spiking the bracket. Taking the first one on time is usually cheaper.
Which Accounts Have Them
- Traditional 401(k)s, 403(b)s, 457 plans, and traditional IRAs: yes, starting at 73.
- Roth 401(k)s: RMDs ended for everyone starting in 2024 under SECURE 2.0.
- Roth IRAs: never had them for the original owner.
- Still working? A current employer's 401(k) can delay RMDs past 73 if the plan allows and you own under 5% of the company.
Planning Around the Bill
Withdrawals are taxed as ordinary income, stacked on top of Social Security — and up to 85% of benefits become taxable once provisional income crosses about $34,000 single. The standard counter-moves are Roth conversions in the 60-to-73 window, which shrink future balances and future RMDs, and qualified charitable distributions: from age 70½, up to roughly $108,000 a year (indexed) can go straight from an IRA to charity, satisfying RMDs without touching taxable income.
Miss one and file promptly: the 25% penalty drops to 10% if corrected within two years. For a missed $10,000 RMD that difference is $1,500.
This article is general educational information only, not financial, tax, investment, accounting, or legal advice, and is not a recommendation to buy, sell, or hold any product or security. Figures reflect published IRS, HMRC, and Social Security Administration guidance for 2026 and are subject to change and annual indexing; always confirm current thresholds with the official source before acting. Rules differ by country, state, and personal situation, and nothing here creates a fiduciary or advisory relationship. This site is supported by advertising, which does not influence our editorial conclusions. For any decision with real financial consequences, consult a licensed fiduciary advisor or tax professional.