RMD stands for Required Minimum Distribution. It’s the mi

RMD stands for Required Minimum Distribution.

It’s the minimum amount you must withdraw each year from certain retirement accounts once you reach a specific age. The IRS requires this so that tax-deferred savings (like in traditional IRAs, 401(k), 403(b), and similar plans) eventually get taxed.

A few key points:

• Starting age:

  • If you turned 73 in 2023 or later → your first RMD starts at age 73.

  • Starting 2033, the age will move to 75 (per SECURE Act 2.0).

• Which accounts:

  • Traditional IRA, SEP IRA, SIMPLE IRA

  • 401(k), 403(b), 457(b) (unless still working and plan rules allow exemption)

  • Roth IRA → no RMDs during the owner’s lifetime

• How it’s calculated:
  RMD = Account balance (as of Dec 31 of previous year) ÷ Life expectancy factor (IRS table)

• Deadline:

  • First RMD: by April 1 of the year after you hit RMD age.

  • After that: by December 31 each year.

• Penalty if you miss:
  Previously 50% of the shortfall, but since 2023 it’s generally 25% (and can be reduced to 10% if corrected promptly).