Taxes · 4 min read · Updated November 10, 2026

Required minimum distributions, explained

Illustrative examples, education not advice.

In plain words

Traditional IRAs and 401(k)s let money grow for decades without tax. The government eventually wants its share, so the law requires you to start taking money out at a certain age. These yearly withdrawals are required minimum distributions (RMDs), and they’re taxed as ordinary income.

When they start, under current federal law:

Age 73 if you were born from 1951 through 1959.
Age 75 if you were born in 1960 or later.

Your first RMD can wait until April 1 of the year after you reach your RMD age. Every later RMD is due by December 31. If you delay the first one, you’ll take two in that next year.

What’s covered: traditional IRAs, SEP and SIMPLE IRAs, and pre-tax money in 401(k), 403(b) and 457(b) plans. Roth IRAs have no RMDs for the original owner, and since 2024 neither do Roth accounts inside workplace plans.

How the amount is set: take the account balance on December 31 of last year and divide it by a life expectancy factor from the IRS Uniform Lifetime Table. At 75 the factor is 24.6, so the RMD is a bit over 4% of the balance. The percentage rises each year.

If you miss one: the excise tax is 25% of the amount you should have taken, cut to 10% if you correct it in time.

How it helps real people

RMDs don’t sound like a strategy, but planning for them is. Large pre-tax balances can create large forced income in your 70s and 80s. That income can:

push you into a higher tax bracket,
make up to 85% of your Social Security taxable,
raise Medicare Part B and D premiums through income-related surcharges,
and hit a surviving spouse even harder, since they’ll often file as single.

Knowing this years ahead gives you options: Roth conversions in your 60s, drawing from pre-tax accounts earlier, or giving to charity directly from an IRA.

A worked example

Illustrative. Walter turns 75 in 2035 (born 1960). His IRA was worth $900,000 at the end of 2034.

RMD factor at 75: 24.6
First RMD: $900,000 ÷ 24.6 ≈ $36,585

Along with his Social Security and a small pension, that brings his income high enough that more of his Social Security becomes taxable.

His neighbour June, the same age, did Roth conversions of $60,000 a year from 64 to 69, staying in the 12% and 22% brackets. Her IRA at 75 is about $520,000, so her RMD is about $21,100. She has a separate Roth balance she can draw from tax-free when she needs more.

At 70½ and later, June also gives $5,000 a year to her church directly from her IRA as a qualified charitable distribution. That counts toward her RMD and isn’t taxed. These numbers are illustrative only and depend on returns and tax law.

Who it’s for

Anyone with traditional IRA or 401(k) money approaching their 60s and 70s.
People who inherited a retirement account.
People helping aging parents with their finances.

Who it’s not for

People whose savings are mostly in Roth accounts, taxable accounts or cash value life insurance. Those don’t have lifetime RMDs.

Inherited accounts

Most non-spouse beneficiaries who inherited from someone who died in 2020 or later must empty the account by the end of the 10th year after death. If the original owner had already started RMDs, the heir must also take yearly RMDs in years one through nine. Spouses, minor children of the owner, disabled or chronically ill heirs, and heirs not more than 10 years younger than the owner have more flexible options. These rules are detailed, so a licensed tax professional is worth a call after inheriting.

Risks and trade-offs

Forced sales. RMDs may require selling investments in a down market. Keeping a year or two of RMDs in cash inside the IRA can help.
Bracket creep. RMDs grow as a percentage each year.
Survivor tax. A widow or widower inherits the same balances with narrower single brackets.
Planning too late. The best tools, like Roth conversions, work best in the years before RMDs begin.

Common mistakes

Missing the first deadline, or delaying it and stacking two RMDs into one tax year without planning.
Taking RMDs from the wrong account. IRA RMDs can be combined and taken from any of your IRAs. 401(k) RMDs must come from each plan separately.
Trying to roll over or convert an RMD. RMD amounts can’t be rolled into another account or converted to Roth.
Forgetting the still-working rule. If you’re still working and don’t own 5% or more of the company, your current employer’s plan may let you delay its RMDs until you retire. This doesn’t apply to IRAs.

FAQs

Can I take more than the minimum?

Yes. The RMD is a floor. Taking more doesn’t reduce next year’s minimum.

Can I have taxes withheld from my RMD?

Yes. Many retirees have tax withheld from their RMD to cover their yearly tax bill.

Do I have to spend the RMD?

No. You must withdraw it and pay tax, but you can reinvest the rest in a taxable account.

Does an annuity inside my IRA count?

Yes, though a qualifying longevity annuity contract (QLAC) can delay RMDs on up to $210,000 (2026 limit) until payments begin, no later than 85.

Can a qualified charitable distribution satisfy my RMD?

Yes. From 70½, gifts sent directly from an IRA to charity count toward your RMD, up to $111,000 in 2026.

Your next step

Ask VeraLife (/#ask) to project your first RMD and how it would change your tax bracket.

Education, not advice. Examples are illustrative. VeraLife.ai is not a registered investment adviser, broker-dealer or insurance agency.