Once you reach a certain age, the IRS requires you to start withdrawing a minimum amount each year from most retirement accounts — this article explains which accounts are affected, when withdrawals begin, how the amount is calculated, and what happens if you miss a deadline.

A Required Minimum Distribution (RMD) is the smallest amount the Internal Revenue Service (IRS) requires you to withdraw from a tax-deferred retirement account each year after you reach the age at which RMDs begin. The rules are set by federal law and apply regardless of whether your account is a standard IRA at a brokerage or a Self-Directed IRA (SDIRA) on the Retired.com platform, held in custody by Digital Trust.

RMDs apply to most tax-deferred retirement accounts, including Traditional IRAs, SEP IRAs, SIMPLE IRAs, 401(k)s, 403(b)s, and 457(b) plans. They also apply to inherited IRAs, including inherited Roth IRAs, though the timing rules for inherited accounts differ from the standard RMD schedule.

RMDs do not apply to Roth IRAs during the original owner's lifetime. Under the SECURE 2.0 Act (the Setting Every Community Up for Retirement Enhancement Act of 2022), lifetime RMDs on designated Roth accounts in workplace plans — Roth 401(k)s and Roth 403(b)s — were eliminated beginning in 2024.

The age at which RMDs begin depends on your year of birth:

Your first RMD is for the calendar year in which you reach the applicable age. You can take that first distribution any time during that year, or you can delay it until April 1 of the following year — this is called the Required Beginning Date (RBD). Every RMD after the first must be taken by December 31 of the year it is for. Delaying your first RMD means you will take two distributions in the same tax year — the delayed first one, plus the second year's on its regular December 31 deadline. That can increase your taxable income for that year.

The annual RMD for a given account is calculated by dividing the account's balance as of December 31 of the prior year by a life-expectancy factor from the IRS Uniform Lifetime Table (published in IRS Publication 590-B). A narrower table applies for account holders whose sole beneficiary is a spouse more than 10 years younger.

The formula is:

RMD = (prior year-end account balance) ÷ (IRS life-expectancy factor)

Digital Trust, the custodian for your account, provides the prior year-end fair market value (FMV) used for your account on your annual tax statements, which you can access through the Retired.com platform. Because the life-expectancy factor changes each year, the RMD amount has to be recalculated every year.

If you have more than one retirement account, the aggregation rules depend on account type:

If you do not take the full RMD by the deadline, the IRS imposes an excise tax on the shortfall. Under the SECURE 2.0 Act, the penalty is 25% of the amount that should have been withdrawn but wasn't. That rate drops to 10% if you correct the shortfall within a two-year correction window and report it on IRS Form 5329. In some cases, the IRS will waive the penalty entirely if the shortfall was due to reasonable error and you are taking steps to remedy it — Form 5329 is also used to request that waiver.

We recommend consulting a tax advisor or attorney for guidance specific to your situation.

Do I have to take RMDs from a Roth IRA?
No. Roth IRAs are not subject to RMDs during the original owner's lifetime. Beneficiaries who inherit a Roth IRA are subject to distribution rules, but those are separate from standard RMDs.

Can I take more than the minimum?
Yes. The RMD is a floor, not a ceiling. You can withdraw more than the RMD amount in any year, but any extra withdrawn does not reduce future years' RMDs — each year is calculated on its own prior year-end balance.

Are RMDs taxable?
Distributions from Traditional, SEP, and SIMPLE IRAs are generally taxed as ordinary income in the year you receive them. State tax treatment varies. We recommend consulting a tax advisor or attorney for guidance specific to your situation.

Can I roll my RMD over into another retirement account?
No. RMDs are not eligible for rollover. If you attempt to roll an RMD into another retirement account, the IRS treats the rollover amount as an excess contribution, which has its own set of penalties. Any rollover you do take should be for funds above and beyond the RMD.

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