Retirement and Social Security
Definition
The minimum amount you must withdraw each year from most retirement accounts once you reach a certain age, currently 73.
What it means
Required minimum distributions make sure tax-deferred retirement money is eventually taxed. Owners of traditional IRAs, SEP and SIMPLE IRAs and most workplace plans generally must start withdrawals at age 73; under the SECURE 2.0 Act this rises to 75 for people born in 1960 or later. The first RMD can be delayed to April 1 of the year after you reach the required age, but then two withdrawals are due that year. Each year's amount is generally the prior December 31 balance divided by a life expectancy factor from IRS tables. Roth IRAs have no RMDs for the original owner, and since 2024 neither do Roth accounts in workplace plans. Missing an RMD can bring a 25% excise tax, reduced to 10% if corrected in time.
Example
An IRA owner who turns 75 in 2026 with a balance of $500,000 on December 31, 2025 divides by the Uniform Lifetime Table factor of 24.6, for an RMD of about $20,325.
Illustrative numbers only. Your situation will differ.