What happens if I miss an RMD?

If you fail to take your full RMD by the required deadline, the IRS imposes a substantial penalty. This penalty is generally 25% of the amount that should have been withdrawn but was not. If you promptly correct the mistake by taking the RMD and notifying the IRS, the penalty may be reduced to 10%. This significant financial hit underscores the importance of understanding and fulfilling your RMD obligations annually.

Can I delay my first RMD?

Yes, you have a special rule for your very first RMD. While subsequent RMDs must be taken by December 31st of each year, your initial RMD (for the year you turn 73) can be delayed until April 1st of the following year. However, if you choose this delay, you will then have to take two RMDs in that subsequent year: your first RMD by April 1st, and your second RMD (for the current year) by December 31st. This can lead to a larger taxable income in that single year.

Do Roth IRAs have RMDs?

For the original owner, Roth IRAs are unique in that they are not subject to Required Minimum Distributions during their lifetime. This allows the funds to continue growing tax-free indefinitely. However, if a Roth IRA is inherited by a beneficiary (other than a spouse who elects to treat it as their own), that beneficiary will typically be subject to RMD rules, usually requiring the account to be emptied within 10 years, unless they meet specific exceptions.

Retirement Planning Explainer

What Is RMD? Simply Explained

A Required Minimum Distribution (RMD) is the minimum amount you must withdraw from your tax-deferred retirement accounts each year, beginning at age 73 (for those turning 73 after December 31, 2022), to avoid substantial tax penalties.

4 FAQSPublished Mar 11, 2026Updated Mar 27, 2026Live Content

By Orbyd Editorial · AI Fin Hub Team

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Definition

Required Minimum Distribution (RMD)

Why it matters

Failing to take your RMD on time can result in a significant penalty of 25% of the amount not withdrawn, directly impacting your retirement savings and financial planning. This penalty can potentially be reduced to 10% if the error is corrected promptly, but it still represents a substantial and avoidable loss of your retirement funds.

How it works

RMDs apply to most tax-deferred retirement accounts, including traditional IRAs, SEP IRAs, SIMPLE IRAs, 401(k)s, 403(b)s, and 457(b) plans. For individuals who turn 73 after December 31, 2022, RMDs must begin by April 1st of the year following the year they turn 73. Subsequent RMDs must be taken by December 31st each year. The RMD amount is calculated by dividing your account balance as of December 31st of the *previous year* by a life expectancy factor provided by the IRS. The formula is: **RMD = (Account Balance as of December 31st of Prior Year) / (Life Expectancy Factor from IRS Tables)** For IRAs, you can calculate the RMD for each IRA separately or calculate the total RMD for all IRAs and withdraw it from one or more. However, RMDs for 401(k)s and other employer plans must be taken separately from each plan.

Example

Calculating Your First RMD

Prior Year-End Account Balance

$500,000

Age Reached in Current Year

IRS Life Expectancy Factor (for age 73)

26.5

Withdrawal Deadline for First RMD

April 1st of the year following the year you turn 73

If your Traditional IRA balance was $500,000 on December 31st of the previous year, and you turn 73 in the current year, your RMD would be $500,000 / 26.5 = $18,867.92. You must withdraw at least this amount by April 1st of the next year (for your first RMD) or by December 31st (for subsequent RMDs) to avoid penalties.

Key Takeaways

Required Minimum Distributions (RMDs) are mandatory annual withdrawals from most tax-deferred retirement accounts, typically starting at age 73.

Your RMD is calculated by dividing your previous year-end account balance by an IRS-provided life expectancy factor.

Failure to take your RMD by the deadline results in significant penalties, impacting your retirement savings.

FAQ

Questions people ask next

The short answers readers usually want after the first pass.

RMDs apply to most employer-sponsored retirement plans and tax-deferred individual retirement arrangements. This includes traditional IRAs, SEP IRAs, SIMPLE IRAs, 401(k) plans, 403(b) plans, and 457(b) plans. However, Roth IRAs are an exception for the original owner, meaning they are not subject to RMDs during the owner's lifetime. Beneficiaries inheriting any of these accounts, including Roth IRAs, typically face RMD rules.

Sources & References

IRS Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs) — Internal Revenue Service
IRS Topic No. 557, Required Minimum Distributions (RMDs) — Internal Revenue Service

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