Required Minimum Distributions (RMDs): Rules, Amounts, and How to Minimize Them

The government lets you defer taxes on Traditional IRA and 401(k) money for decades. But at some point, they want their cut. Required Minimum Distributions (RMDs) are the IRS's way of forcing you to start withdrawing — and paying taxes on — your pre-tax retirement accounts.

Miss an RMD and the penalty is steep. But there are legal strategies to reduce how much you're forced to take out — and the tax bill that comes with it.

RMD Starting Age

Under the SECURE 2.0 Act, the starting age for RMDs is 73 for anyone born after 1950 (and will increase to 75 for those born after 1960).

You must take your first RMD by April 1 of the year after you turn 73. Every year after that: December 31 deadline.

Roth IRAs: No RMDs during your lifetime. This is a major advantage of Roth accounts. Roth 401(k)s: Required RMDs while you're alive (though you can roll to Roth IRA to avoid them).

How RMD Amounts Are Calculated

Formula: Account balance ÷ IRS life expectancy factor

The IRS Uniform Lifetime Table provides the factor. For a 73-year-old, the factor is 26.5.

Example: $800,000 IRA balance ÷ 26.5 = $30,189 required withdrawal

That $30,189 is added to your ordinary income and taxed at your marginal rate.

RMD amounts increase as you age — both because the factor drops and because your account may keep growing.

The Penalty for Missing an RMD

SECURE 2.0 reduced the penalty from 50% to 25% of the missed amount. Still significant.

Example: Required $30,000 RMD, you miss it. Penalty: $7,500.

The IRS does allow correction within two years at a reduced 10% penalty. Don't rely on this.

Strategies to Reduce RMDs

1. Roth Conversions Before Age 73

Converting Traditional IRA money to Roth IRA reduces your future RMD base. The tax is paid today at your current rate — potentially lower than it will be when RMDs kick in and push you into a higher bracket.

Best window: between retirement and age 73, if your income drops temporarily.

2. Qualified Charitable Distributions (QCDs)

If you're 70½ or older, you can direct up to $105,000/year from your IRA directly to charity. This counts as your RMD but doesn't show up as taxable income.

For people who donate to charity regularly, this is a direct tax saving: the RMD satisfies the donation, the donation isn't taxed.

3. Still Working?

If you're still working at 73 and participating in your current employer's 401(k), you can delay RMDs from that 401(k) until you actually retire (as long as you don't own 5%+ of the company). IRAs still require RMDs at 73 regardless.

4. Don't Over-Accumulate Pre-Tax

This one requires foresight. Contributing aggressively to pre-tax 401(k)s for 40 years can create a large RMD problem. Balancing with Roth contributions through your career reduces the eventual RMD base.

The Bottom Line

• RMDs start at 73 for most people; missing one costs 25% of the missed amount
• Roth IRAs have no RMDs — another reason to favor Roth if your tax rate allows it
• Roth conversions in your 60s can dramatically reduce future RMDs
• Qualified Charitable Distributions let you satisfy RMDs with donations, tax-free
• Calculate your projected RMD years in advance — surprises are expensive

Use our Retirement Calculator to project your account balance at 73 and estimate what your RMDs will look like.