Required Minimum Distribution (RMD)
The minimum annual withdrawal the IRS requires from traditional retirement accounts starting at age 73.
What is RMD?
A Required Minimum Distribution (RMD) is the minimum amount the IRS requires holders of Traditional IRAs, 401(k)s, and most other pre-tax retirement accounts to withdraw annually starting at age 73 (as of the SECURE 2.0 Act of 2022). The IRS imposes RMDs to ensure that tax-deferred retirement savings eventually become taxable income. Failure to take the full RMD results in a penalty of 25% of the shortfall (reduced to 10% if corrected promptly). Roth IRAs are exempt from RMDs during the account holder's lifetime. The RMD amount is calculated using IRS life-expectancy tables applied to the prior year-end account balance.
Example
A 73-year-old with $800,000 in a Traditional IRA uses the IRS Uniform Lifetime Table distribution period of 26.5 years. Their 2025 RMD is $800,000 ÷ 26.5 = $30,189 — which must be withdrawn and is taxed as ordinary income.