A Required Minimum Distribution (RMD) is the amount the IRS requires you to withdraw each year from your tax-deferred retirement accounts, such as traditional IRAs, SEP IRAs, SIMPLE IRAs, and most employer-sponsored plans like 401(k)s. Because contributions to these accounts were made pre-tax, the government eventually requires you to pay income taxes on the withdrawals.
Who Must Take an RMD and When?
Generally, RMDs begin the year you turn 73 (as of 2025). For individuals born in 1960 or later, the required age increases to 75. In the year you reach your RMD age, you have until April 1 of the following year to take your first distribution; however, all subsequent RMDs must be withdrawn by December 31 of each year. Waiting until April 1 may result in two RMDs in the same calendar year, potentially increasing your taxable income, so timing and planning in advance is important.
Roth IRAs are the one exception; the original owner is never required to take RMDs during their lifetime.
How Is an RMD Calculated?
The RMD amount is based on your account balance as of December 31 of the previous year, divided by a life expectancy factor from the IRS Uniform Lifetime Table. This can also change on a few other factors such as the age difference between spouses. Nonetheless, a general example would be at age 73, the divisor is 26.5. If your previous end of year IRA balance is $530,000, your RMD would be $530,000 ÷ 26.5 = $20,000. The custodian can help calculate the figure, but the responsibility to take the correct amount lies with you.
RMDs from Inherited IRAs
Inherited IRAs follow different rules depending on your relationship to the deceased and the year of death. Most non-spouse beneficiaries must fully distribute the account within 10 years of the original owner’s death (the “10-Year Rule”). Annual RMDs may also be required during that period, depending on whether the original owner had already begun taking RMDs. The calculation typically uses the beneficiary’s life expectancy from the Single Life Table, starting in the year after the owner’s death.
If you are a spouse beneficiary, you have two options with an Inherited IRA: you can either roll over the account into your own IRA or keep it as a separate Inherited IRA. The main reason to choose between these options is when RMDs will begin. If your spouse was younger than you, you can maintain it as an Inherited IRA and delay RMDs until they would have reached their required beginning age. Conversely, if your spouse was older than you, you can do a spousal rollover and delay distributions until your RMD age.
Using Qualified Charitable Distributions (QCDs)
A Qualified Charitable Distribution (QCD) allows IRA owners aged 70½ or older to send up to $108,000 per year (as of 2025) directly to a qualified charity. These donations count toward your RMD but are excluded from taxable income, offering a powerful tax-planning strategy for charitably inclined retirees.
There are many nuances with RMDs and inherited accounts. Navigating the rules around timing, beneficiary status, and tax implications can feel overwhelming, but thoughtful planning can make a meaningful difference. Whether you’re approaching your first RMD, managing an inherited IRA, or looking to incorporate strategies like Qualified Charitable Distributions, understanding your options helps you avoid costly mistakes and optimize your long-term financial picture.
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