Required Withdrawals From Your IRA: The Basics

Money in a traditional IRA or 401(k) has not been taxed yet. At some point, the IRS requires you to start taking money out and paying tax on it. These required withdrawals are called required minimum distributions, or RMDs.

Key takeaways

• RMDs apply to most pre-tax retirement accounts
• The starting age depends on the year you were born
• Missing an RMD can lead to a penalty
• RMDs add to your taxable income

What an RMD is

An RMD is the least amount you must withdraw from certain retirement accounts each year once you reach the required age. The withdrawal is taxed as ordinary income. Roth IRAs do not have RMDs for the original owner.

When they start

Recent laws have moved the starting age later, and it now depends on your birth year. Check the current IRS rules for your own date, since this has changed more than once.

How the amount is figured

Each year, the IRS uses your account balance at the end of the prior year and a life expectancy factor from an IRS table. The balance is divided by the factor. As you age, the factor gets smaller, so the required share gets larger.

Why RMDs matter for your taxes

RMDs can raise your income in ways people do not always expect:

1. They can push you into a higher tax bracket.
2. They can increase the part of your Social Security that is taxed.
3. They can raise your Medicare Part B and Part D premiums two years later.

Ways people plan ahead

• Look at the balances in each pre-tax account well before the starting age.
• Consider whether partial Roth conversions make sense in the years before RMDs begin.
• If you give to charity, ask whether a qualified charitable distribution from an IRA could fit your plans. Rules and limits apply.
• Set a reminder each year so a withdrawal is not missed.

• Find out your RMD starting age based on your birth year
• List every pre-tax account you own, including old 401(k) plans
• Ask your custodian whether they can calculate and send your RMD
• Review how RMDs may affect your tax bracket and Medicare costs

Sources and references

• IRS: Retirement plan and IRA required minimum distributions FAQs (opens in a new tab)
• IRS: Publication 590-B, Distributions from IRAs (opens in a new tab)

This article is general information, not tax or investment advice for your situation. Tax rules change over time. Talk with a qualified professional before making decisions.