Retirement Topics — Required Minimum Distributions (RMDs)

 

You cannot keep retirement funds in your account indefinitely. You generally have to start taking withdrawals from your IRA, SIMPLE IRA, SEP IRA, or retirement plan account when you reach age 72 (or 70 ½ if you turned age 70 ½ prior to January 1, 2020). Roth IRAs do not require withdrawals until after the death of the owner.

Your required minimum distribution is the minimum amount you must withdraw from your account each year.

  • You can withdraw more than the minimum required amount.
  • Your withdrawals will be included in your taxable income except for any part that was taxed before (your basis) or that can be received tax-free (such as qualified distributions from designated Roth accounts).

Calculating the required minimum distribution

The required minimum distribution for any year is the account balance as of the end of the immediately preceding calendar year divided by a distribution period from the IRS’s “Uniform Lifetime Table.” A separate table is used if the sole beneficiary is the owner’s spouse who is ten or more years younger than the owner.

  • worksheets to calculate the required amount
  • tables to calculate the RMD during the participant or IRA owner’s life:

Inherited IRAs - if your IRA was inherited from the original owner, see "required minimum distributions after the account owner dies," below.

Beginning date for your first required minimum distribution

  • IRAs (including SEP and SIMPLE IRAs)
    • April 1 of the year following the calendar year in which you reach age 72 (or 70 ½ if you turned age 70 ½ prior to January 1, 2020).
  • 401(k), profit-sharing, 403(b), or other defined contribution plan
    Generally, April 1 following the later of the calendar year in which you:
    • reach age 72 (or 70 ½ if you turned age 70 ½ prior to January 1, 2020), or
    • retire.

See the chart comparing IRA and defined contribution plan RMDs.

When to use age 72 or age 70 ½

You reach age 70½ on the date that is 6 calendar months after your 70th birthday.

Example: You are retired and your 70th birthday was June 30, 2019. You reached age 70½ on December 30, 2019. You must take your first RMD (for 2019) by April 1, 2020, and your second RMD (for 2020) by December 31, 2020.

Example: You are retired and your 70th birthday was July 1, 2019. You reached age 70½ on January 1, 2020. You do not have an RMD for 2019. You must take your first RMD for 2021, when you turn 72, by April 1, 2022.

Terms of the plan govern

The terms of your employer-sponsored retirement plan may allow you to wait until the year you actually retire to take your first RMD (unless you’re a 5% owner). Alternatively, a plan may require you to begin receiving distributions by April 1 following the year you reach age 72 (or 70 ½ if you turned age 70 ½ prior to January 1, 2020), even if you have not retired.

5% owners

If you own 5% or more of the business sponsoring the plan, then you must begin receiving distributions by April 1 of the year after the calendar year in which you reach age 72 (or 70 ½ if you turned age 70 ½ prior to January 1, 2020).

Date for receiving subsequent required minimum distributions

For each subsequent year after your required beginning date, you must withdraw your RMD by December 31.

The first year following the year you reach age 72 (or 70 ½ if you turned age 70 ½ prior to January 1, 2020), you will generally have two required distribution dates: an April 1 withdrawal (for the year you turn 72 (or 70 ½ if you turned age 70 ½ prior to January 1, 2020), and an additional withdrawal by December 31 (for the year following the year you turn 72 (or 70 ½ if you turned age 70 ½ prior to January 1, 2020)). To avoid having both of these amounts included in your income for the same year, you can make your first withdrawal by December 31 of the year you were required to take your first distribution instead of waiting until April 1 of the following year.

Example: John reached age 70 ½ on August 2, 2019. Since John had reached age 70 ½ before 2020, he must receive his 2019 RMD by April 1, 2020, based on his 2018 year-end balance. John has until December 31, 2020, to receive his 2020 RMD, based on his 2019 year-end balance. 

If John receives his initial RMD for 2019 on April 1, 2020, then both his 2019 and 2020 distributions will be included in income on his 2020 income tax return.

Example: Paul reached age 70 ½ on January 28, 2020. Since Paul had not reached age 70 ½ before 2020, his first RMD is due for 2021, the year he turns 72. Paul’s first RMD is due by April 1, 2022, based on his 2020 year-end balance. Paul must receive his 2022 required minimum distribution by December 31, 2022, based on his 2021 year-end balance. 

Consequence for failing to take required minimum distributions

If you do not take any distributions, or if the distributions are not large enough, you may have to pay a 50% excise tax on the amount not distributed as required.

Required minimum distributions after the account owner dies

For the year of the account owner’s death, use the RMD the account owner would have received. For the year following the owner’s death, the RMD will depend on the identity of the designated beneficiary.

Calculating required minimum distributions for designated beneficiaries

Beneficiaries of retirement accounts and IRAs calculate RMDs using the Single Life Table (Table I, Appendix B, Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs)). The table shows a life expectancy based on the beneficiary’s age. The account balance is divided by this life expectancy to determine the first RMD. The life expectancy is reduced by one for each subsequent year.

  • Spouses who are the sole designated beneficiary can:
    • treat an IRA as their own, or
    • base RMDs on their own current age,
    • base RMDs on the decedent’s age at death, reducing the distribution period by one each year, or
    • withdraw the entire account balance by the end of the 5th year following the account owner’s death, if the account owner died before the required beginning date. If the account owner died before the required beginning date, the surviving spouse can wait until the owner would have turned 72 (or 70 ½ if you turned age 70 ½ prior to January 1, 2020) to begin receiving RMDs.
    • If the account owner dies after 2019, beneficiaries who are disabled or chronically ill, or not more than 10 years younger than the account owner, or a child of the account owner who has not reached the age of majority are also eligible to use the RMD options available to a spouse.
  • Individual beneficiaries other than a spouse can:
    • withdraw the entire account balance by the end of the 5th year following the account owner’s death, if the account owner died before the required beginning date, or
    • calculate RMDs using the distribution period from the Single Life Table based on:
      • If the owner died after RMDs began, the longer of the:
        • beneficiary’s remaining life expectancy determined in the year following the year of the owner’s death reduced by one for each subsequent year, or
        • owner’s remaining life expectancy at death, reduced by one for each subsequent year
      • If the account owner died before RMDs began, the beneficiary’s age at year-end following the year of the owner’s death, reducing the distribution period by one for each subsequent year.
  • Secure Act changes – Effective January 1, 2020, for account owners who die after December 31, 2019, (with a delayed effective date for certain collectively bargained plans), the SECURE Act requires the entire balance of the participant’s account be distributed within ten years. There is an exception for a surviving spouse, a child who has not reached the age of majority, a disabled or chronically ill person or a person not more than ten years younger than the employee or IRA account owner. The new 10-year rule applies regardless of whether the participant dies before, on, or after, the required beginning date, which effective January 1, 2020 is age 72.

See Publication 590-B, Distribution from Individual Retirement Arrangements (IRAs), for details on calculating required distributions for beneficiaries.

Chart of required minimum distributions for IRA beneficiaries

Do these rules apply to my retirement plan?

These minimum distribution rules apply to:

  • traditional IRAs
  • SEP IRAs
  • SIMPLE IRAs
  • 401(k) plans
  • 403(b) plans
  • 457(b) plans
  • profit-sharing plans
  • other defined contribution plans

Additional resources