Required minimum distributions are mandatory withdrawals from retirement accounts that begin at age 73, and the rules are the same whether you earn $30,000 or $300,000 a year

A required minimum distribution (RMD) is the smallest amount the IRS requires you to withdraw from a retirement account each year once you reach a certain age. For most people, that age is now 73 (it was 72 before 2023, and will be 75 in 2033 under current law). The amount you must withdraw is calculated by dividing your account balance by a life expectancy factor the IRS publishes each year.

The income level you have does not change the rules — the IRS does not waive RMDs for people with lower incomes. What does change is how much the withdrawal hurts your finances and what tax consequences follow. For someone living on a tight budget, an RMD can push you into a higher tax bracket, reduce your may be able to access for certain benefits, or force you to sell investments at the wrong time.

The penalty for not taking an RMD is severe: the IRS charges 25 percent of the amount you should have withdrawn but did not (reduced to 10 percent if you correct it within two years). That is why understanding the rules matters, even if the numbers seem small.

Key Takeaways

  • RMDs start at age 73 for most people and apply to traditional IRAs, 401(k)s, and similar accounts, but not Roth IRAs while the original owner is alive.
  • The amount you must withdraw is based on your account balance and your age, not your income or how much money you actually need.
  • Missing an RMD triggers a 25 percent penalty on the shortfall, which is one of the harshest penalties the IRS imposes.
  • For lower-income people, an RMD can increase your taxable income enough to affect tax credits, Medicare premiums, and Supplemental Security Income (SSI).
  • Some exceptions exist — you can delay your first RMD until April 1 of the year after you turn 73, and certain people can use a "may have access to charitable distribution" to reduce the tax hit.

Which accounts trigger RMDs and which ones do not

Not every retirement account has an RMD. Traditional IRAs and SEP IRAs require RMDs starting at 73. 401(k)s, 403(b)s, and 457 plans also require them. But Roth IRAs do not — you can leave a Roth untouched for your entire life, and your heirs inherit it tax-free.

If you have multiple accounts of the same type (say, two traditional IRAs), you calculate the RMD for each one separately, but you can withdraw the total from just one account. If you have both an IRA and a 401(k), you must calculate each separately and cannot combine them — you have to take the 401(k) RMD from the 401(k) itself.

Inherited retirement accounts have different rules. If you inherited an IRA or 401(k) from someone who died, your RMD depends on when they died and whether you are a spouse. This is one area where a tax preparer's help is worth the cost, because the rules are genuinely complicated and the penalty for getting it wrong is steep.

How the IRS calculates the amount you must withdraw

The IRS publishes a Uniform Lifetime Table that lists a "distribution period" for each age. You divide your account balance as of December 31 of the previous year by that distribution period. The result is your RMD for that year.

For example: if you are 73 and your traditional IRA balance was $100,000 on December 31 of the previous year, the distribution period is 26.5. You divide $100,000 by 26.5, which equals $3,773.58. That is your RMD for the year. If you are 80, the distribution period is 20.2, so the same $100,000 account would require a $4,950 withdrawal.

The calculation does not account for whether you need the money, whether you are still working, or whether the withdrawal will push you into a higher tax bracket. It is purely mechanical. If your account grows during the year, your next year's RMD will be higher. If it shrinks, your next year's RMD will be lower.

Why RMDs hit lower-income households harder

For someone earning $25,000 a year, a $4,000 RMD is not a small thing — it can represent 16 percent of your annual income. More importantly, that $4,000 counts as taxable income, which can trigger consequences that wealthier people do not face.

If you receive Supplemental Security Income (SSI), an RMD counts as unearned income and can reduce or eliminate your benefit. If you are on Medicare and your income crosses certain thresholds, your premiums jump — the Income-Related Monthly Adjustment Amount (IRMAA) kicks in at $97,000 for single filers in 2024, but even lower-income people can be affected if they have multiple income sources. If you claim the Earned Income Tax Credit (EITC), a large RMD can reduce the credit you receive.

The tax on the RMD itself is also progressive. If you are in the 12 percent tax bracket and the RMD pushes you into the 22 percent bracket, you pay the higher rate on the RMD amount. For someone on a fixed income, that tax bill can mean cutting back on food or medicine.

The deadline and the penalty for missing it

Your first RMD is due by April 1 of the year after you turn 73. After that, all RMDs are due by December 31 of each year. If you miss the deadline, the IRS charges a penalty of 25 percent of the shortfall — meaning if you should have withdrawn $4,000 and you withdrew nothing, you owe $1,000 in penalty alone, on top of income tax on the $4,000.

The 25 percent penalty is reduced to 10 percent if you correct the mistake within two years. It is reduced to 5 percent if you have a "reasonable excuse" — but the IRS defines that narrowly. Forgetting, not understanding the rules, or thinking you did not need the money does not count. A serious illness or a major financial emergency might, but you have to document it and file a form with the IRS.

If you miss an RMD, contact a tax professional or the IRS directly before filing your tax return. Some situations allow you to request a waiver of the penalty, but you have to ask — the IRS will not offer it automatically.

Strategies to reduce the tax impact of an RMD

If you are charitably inclined, a may have access to charitable distribution (QCD) lets you transfer up to $100,000 per year directly from your IRA to a charity. The money does not count as taxable income to you, and it satisfies your RMD requirement. This only works if you are 73 or older and the money goes directly from the IRA to the charity — you cannot take the money yourself and then donate it.

If you do not need the RMD money, you can reinvest it in a taxable brokerage account. You will still owe income tax on the withdrawal, but after that the money can grow without the RMD requirement hanging over it. This does not reduce the tax hit in the year you withdraw, but it gives you more flexibility going forward.

If you are still working and your employer offers a 401(k), you may be able to delay your RMD from that 401(k) (though not from an IRA) under the "still-working exception." This only works if you do not own more than 5 percent of the company. It is a narrow exception, but it can help if you are in a lower-income job and do not want the extra income.

How an RMD affects your taxes and benefits

An RMD is added to your other income for the year, which can have ripple effects. If you are receiving SSI, the RMD reduces your benefit dollar-for-dollar after a small exclusion ($65 per month in 2024). If you are on Medicare, the RMD can trigger IRMAA surcharges on your premiums. If you are claiming the EITC, the RMD reduces the credit.

Some people in this situation have to choose between taking the RMD and keeping a benefit. There is no legal way around this — the RMD is mandatory. But knowing the impact ahead of time lets you plan. If you know an RMD will cost you $500 in lost SSI benefits, you can at least budget for it.

Work with a tax preparer who understands how RMDs interact with means-tested benefits. A preparer who only knows income tax law may not flag that your RMD will trigger an IRMAA surcharge or reduce your SSI. The cost of a consultation is usually worth it.

Frequently Asked Questions

Can I delay my RMD if I do not need the money?

No. The RMD is mandatory regardless of your financial situation. You can delay your first RMD until April 1 of the year after you turn 73, but after that it must be taken by December 31 each year. If you do not need the money, you can withdraw it and reinvest it, but you cannot skip the withdrawal.

What happens if I withdraw more than my RMD in one year?

The excess counts toward future years' RMDs. If your RMD is $4,000 and you withdraw $6,000, the extra $2,000 reduces what you must withdraw next year. This can be useful if you want to take a larger withdrawal in a year when your income is lower.

Do I have to take an RMD from a Roth IRA?

No, not while you are alive. Roth IRAs have no RMD requirement for the original owner. Your heirs will have RMD requirements after you die, but you can leave your Roth untouched for your entire life.

Can I use my RMD to pay for long-term care or medical bills?

The RMD itself is just a withdrawal — you can use it for anything. But it still counts as taxable income and will trigger the same tax and benefit consequences as any other RMD. There is no special rule that lets you avoid the tax or benefit reduction if you spend the money on medical care.

What if I inherited a retirement account from my spouse?

If you inherited a traditional IRA from your spouse, you can treat it as your own and delay RMDs until you turn 73. If you inherited a 401(k), you have more limited options and should speak with the plan administrator and a tax professional, because the rules depend on when your spouse died and what the plan allows.