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The amount you must withdraw from retirement accounts each year after age 73.
Why It Matters
The IRS let you defer taxes in your 401k and IRA, but they want their money eventually. Starting at 73 (75 for those born after 1960), you must take RMDs based on your age and account balance. Miss an RMD and you'll face a brutal 25% penalty. Roth IRAs have no RMDs - one of their biggest advantages.
Key Points
- Calculated using IRS life expectancy tables (roughly 4% at 73, rising each year)
- Applies to traditional 401k, IRA, 403b - NOT Roth IRA
- RMDs are taxed as ordinary income - can push you into a higher bracket
Related Terms
Common Questions
The amount you must withdraw from retirement accounts each year after age 73. The IRS let you defer taxes in your 401k and IRA, but they want their money eventually. Starting at 73 (75 for those born after 1960), you must take RMDs based on your age and account balance.
The IRS let you defer taxes in your 401k and IRA, but they want their money eventually. Starting at 73 (75 for those born after 1960), you must take RMDs based on your age and account balance. Miss an RMD and you'll face a brutal 25% penalty. Roth IRAs have no RMDs - one of their biggest advantages.
Calculated using IRS life expectancy tables (roughly 4% at 73, rising each year)
Applies to traditional 401k, IRA, 403b - NOT Roth IRA
RMDs are taxed as ordinary income - can push you into a higher bracket