RMD Basics: How Required Minimum Distributions Work

Tax-deferred accounts eventually require withdrawals. Knowing your RMD start age, divisor, and tax impact helps you avoid penalties and smooth lifetime taxes.

Key takeaways

RMDs begin at the legislated age; missed RMDs can incur penalties.
Divisor from IRS table drives required withdrawal amount.
Planning levers: Roth conversions pre-RMD, QCDs, asset location.

Key points

Start age depends on current law (e.g., 73 under recent updates)
RMD = prior year-end balance ÷ life expectancy factor
Missed RMDs may face excise penalties; corrections exist

Planning ideas

Start partial Roth conversions before RMD age to manage brackets
Coordinate RMDs with Social Security timing
Use QCDs (qualified charitable distributions) if eligible

Step-by-step: estimate your RMD

Note prior year-end account balances per account.
Find your age’s life expectancy factor in the IRS table.
Divide balance by factor → RMD amount for the year.
Decide withdrawal timing (lump vs periodic) and tax withholding.

Worked example

Balance $600k; age factor 27.4 → RMD ≈ $21,898
Withhold taxes; coordinate with other income to manage brackets.

Common pitfalls

Forgetting to aggregate across multiple IRAs
Missing first-year deadline or double-counting rollover timing
Not adjusting withdrawals for market volatility and cash needs

Quick checklist

Balances documented; factor verified
Withholding set; advisor consulted if needed
Charitable/QCD plan considered

Decision matrix

Objective	Tax bracket now	Bracket later	Suggested move
Smooth lifetime taxes	Moderate	Higher	Partial Roth conversions pre-RMD
Max charitable impact	Moderate	Moderate	Use QCDs from IRA after eligible age
Lower Medicare IRMAA	High	High	Coordinate withdrawals to manage MAGI

Case study C: conversions before RMD

Age 62–70: convert $30k/yr to Roth to fill 22% bracket, reducing future RMD base; monitor IRMAA thresholds

Extended FAQ

Can RMDs be aggregated across IRAs? Yes for IRAs, but not across 401(k)s; each plan may require its own RMD.

What if markets fall after I withdraw? Consider spreading withdrawals across the year or using a cash sleeve to reduce sequence risk.

Do Roth IRAs have RMDs? Owner Roth IRAs do not have RMDs; inherited Roth IRAs follow different rules.

Use our calculator

Open Retirement Calculator
Enter balances and expected returns
Project withdrawals and tax impact alongside RMDs

Aggregation and account types

IRAs can be aggregated for RMD calculation and taken from any one IRA; 401(k)s generally cannot be aggregated across plans.
Inherited accounts have different rules than owner accounts; track separately.

Inherited IRA differences (brief)

10‑year rule for many non‑spouse beneficiaries; some require annual RMDs within the 10‑year window.
Spousal options: treat as own, remain beneficiary, or rollover—each with tax/age implications.

Roth conversion timing

Converting pre‑RMD years can smooth lifetime taxes; avoid converting amounts that push you into high IRMAA brackets unintentionally.
After RMD age, you must take the RMD first; RMD itself cannot be converted.

Case study D: IRMAA‑aware planning

Couple age 63/61 plans conversions up to, but not over, a targeted MAGI threshold to avoid IRMAA jumps.
Result: lower future RMDs and more Roth assets, with Medicare premiums controlled.

FAQ addendum

Do 403(b) plans aggregate like IRAs? Some do; check plan rules—commonly 403(b)s can be aggregated with each other.

Can QCDs satisfy RMDs? Yes, up to limits; they must be paid directly to qualified charities from IRAs.

Glossary

MAGI: modified adjusted gross income; used for IRMAA and various credits.
QCD: qualified charitable distribution from an IRA meeting specific rules.
Life expectancy factor: the IRS divisor used to compute RMD.

Withdrawal timing strategies

Monthly/quarterly draws can smooth tax withholding and sequence risk vs a single December withdrawal.
Front‑loading early in the year raises sequence risk; back‑loading concentrates market timing. Many households split.

Coordination with giving and taxes

Use QCDs to satisfy part/all of RMD if eligible; reduces taxable income directly.
Pair RMDs with estimated taxes or withholding to avoid penalties; adjust to bracket targets.

Mistakes to avoid (extended)

Missing inherited‑account nuances; rules differ from owner accounts.
Forgetting to take RMD from each 401(k) separately even if IRAs are aggregated.
Not updating beneficiaries; estate outcomes and timelines can change.

Worked withholding mini‑example

RMD $22,000; target effective federal rate ~12% and state 4% → withhold 16% ($3,520) at distribution to minimize underpayment risk.

Toolkit

IRS life expectancy tables, custodian RMD calculators, and a simple spreadsheet to track balances, divisors, and taken amounts across accounts.

Distribution source coordination

Taxable account dividends/interest can cover part of cash needs so that RMDs are reinvested in taxable (after withholding), keeping asset mix stable.
If markets are down, take RMD from bond/cash sleeves to avoid selling equities at lows; rebalance later when appropriate.
Consider withholding directly from an IRA RMD to satisfy estimated taxes instead of making separate quarterly payments.

Worked example II: multiple accounts

Facts: IRA A $350k, IRA B $250k, 401(k) $180k; age factor 27.4.
IRAs: aggregate $600k ÷ 27.4 ≈ $21,898. You may take this entire RMD from just IRA A (or B), or split between them.
401(k): separate RMD based only on $180k ÷ 27.4 ≈ $6,569; must be withdrawn from that plan.
Coordination: withhold taxes from IRA RMD (e.g., 16%) to cover total liability; take 401(k) RMD gross and move proceeds to taxable bucket.

Checklist (recap)

Balances noted; divisors verified; account aggregation rules understood.
Withholding planned to bracket targets and IRMAA thresholds.
QCD eligibility considered; beneficiary designations current.

SECURE Act updates (context)

Laws governing start ages and beneficiary rules have shifted in recent years. Confirm the current RMD start age and inherited‑account rules annually; do not rely on outdated thresholds.

Mini scenarios (illustrative)

Charitable giver: uses QCDs to satisfy part of RMD, lowering taxable income while meeting giving targets.
Widow/er transition: reviews beneficiary elections after life changes; adjusts conversion amounts to new filing status.
High‑income couple: coordinates partial conversions up to, not beyond, IRMAA tiers to avoid premium jumps.

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