Quick Answer
Required Minimum Distributions (RMDs) force you to withdraw a minimum amount from traditional 401(k)s and IRAs starting at age 73. The amount equals your account balance divided by an IRS life expectancy factor — roughly 3.65% at age 73, increasing each year.
Best Answer
Marcus Rivera, Compensation & Benefits Analyst
People approaching or at RMD age who need to understand the rules and plan their withdrawals
How RMDs are calculated
Required Minimum Distributions use a simple but inflexible formula mandated by the IRS under IRC Section 401(a)(9). Your RMD equals your December 31st account balance divided by your life expectancy factor from the IRS Uniform Lifetime Table.
The basic formula:
RMD = Account Balance ÷ Life Expectancy Factor
RMD calculation example: $750,000 at age 73
Robert has $750,000 in his traditional 401(k) on December 31, 2025 (the year before he turns 73 in 2026). His 2026 RMD calculation:
If Robert forgets to take his RMD, he faces a 25% penalty on the missed amount — in this case, $7,075.
RMD amounts by age and balance
Key RMD rules and deadlines
First RMD deadline: April 1 of the year after you turn 73
Subsequent RMDs: December 31 each year
Penalty for missing: 25% of the missed amount (reduced to 10% if corrected quickly)
Accounts affected: Traditional 401(k), 403(b), 457, traditional IRAs
Accounts NOT affected: Roth IRAs (during your lifetime), Roth 401(k)s can be rolled to Roth IRAs
RMD aggregation rules
IRAs: You can aggregate all traditional IRA RMDs and take the total from any one IRA
401(k)s: Each 401(k) requires its own separate RMD — no aggregation allowed
403(b)s: Can aggregate with other 403(b)s from the same employer only
Tax planning strategies
Roth conversions before RMDs: Convert traditional IRA money to Roth IRAs in your 60s and early 70s to reduce future RMD amounts
Qualified Charitable Distributions (QCDs): If you're 70½+, donate up to $105,000 directly from your IRA to charity — counts toward RMD but isn't taxable income
Strategic withdrawal timing: Take RMDs in January if you expect higher income later in the year, or in December if you want investment growth potential
What you should do
1. Track your accounts: List all traditional retirement accounts and their balances
2. Set calendar reminders: Mark April 1 for your first RMD, December 31 for subsequent years
3. Plan for taxes: RMDs are ordinary income — budget for the tax hit
4. Consider professional help: Large balances or multiple account types often require specialized planning
Use our [paycheck calculator](paycheck-calculator) to estimate how RMD income will affect your overall tax situation.
Key takeaway: RMDs start at 3.77% of your account balance at age 73 and increase each year. Missing an RMD triggers a 25% penalty, making calendar reminders and tax planning essential.
Key Takeaway: RMDs require withdrawing about 3.77% of your traditional retirement accounts starting at age 73, with the percentage increasing each year and a 25% penalty for missed distributions.
RMD requirements and percentages by age showing how distribution requirements increase over time
| Age | Life Expectancy Factor | RMD Percentage | $500K Balance RMD | $1M Balance RMD |
|---|---|---|---|---|
| 73 | 26.5 | 3.77% | $18,868 | $37,736 |
| 75 | 24.6 | 4.07% | $20,325 | $40,650 |
| 80 | 20.2 | 4.95% | $24,752 | $49,505 |
| 85 | 16.0 | 6.25% | $31,250 | $62,500 |
| 90 | 12.2 | 8.20% | $40,984 | $81,967 |
More Perspectives
Sarah Chen, Payroll Tax Analyst
High-income earners with substantial retirement balances who need sophisticated RMD tax planning
RMD tax optimization for large balances
High earners often accumulate $2M+ in traditional retirement accounts, creating significant RMD tax challenges. At age 73, a $2M balance generates a $75,472 RMD — potentially pushing you into higher tax brackets and triggering Medicare surcharges.
Advanced strategies for high-balance accounts
Roth conversion ladders: In your 60s and early 70s, systematically convert traditional IRA money to Roth IRAs. This reduces future RMD amounts while the conversions can be timed during lower-income years.
Qualified Charitable Distributions: High earners who donate to charity should maximize QCDs. You can donate up to $105,000 directly from IRAs to charity starting at 70½ — this counts toward your RMD but isn't taxable income.
Geographic tax planning: Some states don't tax retirement income. If you're flexible about where to live, time your move to minimize state taxes on large RMDs.
IRMAA impact planning
Medicare Income-Related Monthly Adjustment Amount (IRMAA) kicks in when your Modified Adjusted Gross Income exceeds certain thresholds. For 2026, single filers pay extra Medicare premiums when MAGI exceeds $103,000.
Large RMDs can easily trigger IRMAA surcharges of $2,000-6,000+ annually. Strategic Roth conversions in your 60s can prevent this.
Key takeaway: High earners should begin RMD tax planning in their 60s through Roth conversions and charitable giving strategies to minimize lifetime tax rates and Medicare surcharges.
Key Takeaway: Large RMDs can trigger higher tax brackets and Medicare surcharges, making proactive Roth conversions and charitable giving strategies essential for high-balance accounts.
Marcus Rivera, Compensation & Benefits Analyst
Typical employees with moderate retirement balances who need to understand basic RMD compliance
RMD basics for typical retirement savers
Most W-2 employees have accumulated $200K-800K across their various retirement accounts by age 73. While the dollar amounts aren't as large as high earners face, RMD compliance is just as important — and the rules can be confusing when you have multiple account types.
Common RMD mistakes to avoid
Forgetting about old 401(k)s: That 401(k) you left at a previous employer? It requires its own separate RMD. You can't aggregate it with your IRA RMDs.
Missing the first-year deadline: Your first RMD can be delayed until April 1 of the year after you turn 73, but this means taking two RMDs in one tax year — potentially pushing you into higher brackets.
Not planning for taxes: RMDs are ordinary income. If you're used to having taxes withheld from paychecks, you may need to make quarterly estimated tax payments or have taxes withheld from the RMD itself.
Simple RMD management approach
1. Consolidate where possible: Roll old 401(k)s to IRAs for easier management (but consider Rule of 55 implications first)
2. Set up automatic distributions: Most brokerages can calculate and distribute RMDs automatically
3. Choose tax withholding: Have 10-25% withheld for taxes, depending on your bracket
4. Keep good records: Track RMD amounts for tax filing
Example: Managing $400K across multiple accounts
Susan has $250K in a traditional IRA and $150K in her current employer's 401(k). Her RMDs:
She can take the full IRA RMD from either IRA account if she has multiple, but the 401(k) RMD must come specifically from the 401(k).
Key takeaway: Most employees need a simple, systematic approach to RMD compliance — consolidate accounts where possible, set up automatic distributions, and plan for the tax impact.
Key Takeaway: Typical retirees should focus on RMD compliance basics: consolidate accounts where possible, set up automatic distributions, and plan for the tax impact of ordinary income.
Sources
- IRS Publication 590-B — Distributions from Individual Retirement Arrangements (IRAs)
- IRS Uniform Lifetime Table — Life expectancy factors for RMD calculations
Reviewed by Marcus Rivera, Compensation & Benefits Analyst on February 28, 2026
This content is for educational purposes only and is not a substitute for professional tax advice. Consult a qualified tax professional for advice specific to your situation.