Required Minimum Distribution (RMD)

Required Minimum Distributions (RMDs)

Required Minimum Distributions (RMDs) are the minimum amounts you must withdraw annually from your retirement accounts once you reach a certain age. As of 2025, the RMD age is 73, following updates in the SECURE 2.0 Act. This age will increase to 75 starting in 2033.

You must begin RMDs from the following account types:

• Traditional IRAs
• SEP IRAs
• SIMPLE IRAs
• Employer-sponsored plans such as 401(k)s, 403(b)s, and profit-sharing plans

Still Working?

If you’re still employed and do not own 5% or more of the company sponsoring your workplace retirement plan, you can delay your first RMD from that plan until April 1 of the year after you retire. However, all subsequent RMDs must be taken by December 31 each year.

Flexibility

You may always withdraw more than your RMD, but excess amounts do not carry forward to satisfy future RMDs.

Tax Implications

• Most RMDs are taxed as ordinary income.
• Withdrawals are not required from Roth IRAs during the account owner’s lifetime.
• Starting in 2024, RMDs are no longer required from designated Roth accounts (such as Roth 401(k)s and Roth 403(b)s) in employer-sponsored retirement plans.

Penalties

• If you fail to take your RMD, you’ll owe a 25% excise tax on the amount not withdrawn.
• This penalty drops to 10% if the error is corrected within two years.

For the most up-to-date details, visit the IRS:
https://www.irs.gov/retirement-plans/retirement-plans-faqs-regarding-required-minimum-distributions

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