If you have an IRA, understanding required minimum distributions (RMDs) is an important step in planning for retirement. Starting at age 73, most IRAs generally require you to withdraw a minimum amount each year. Missing an RMD could trigger an IRS excise tax of 25% on the shortfall, which may be reduced to 10% if corrected within two years. Roth IRAs are an exception, as distributions are typically not required during your lifetime.

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This article explains how RMDs work, the rules for inherited IRAs, and strategies to manage withdrawals effectively. You’ll gain a clearer understanding of your options, potential tax implications, and practical steps to stay compliant with IRS rules.
What Is an RMD?
RMD stands for required minimum distribution. Because retirement accounts are tax-advantaged, the IRS generally does not allow money to grow tax-free indefinitely.
Most retirement accounts require you to start taking distributions once you reach age 73. After that, you must take an RMD every year until your account is fully withdrawn.
The first RMD is typically due by April 1 of the year after you turn 73. All subsequent RMDs must be taken by December 31 each year.
What Are the Penalties for Not Taking an RMD?
Failing to take your RMD may result in an IRS excise tax of 25% of the amount you should have withdrawn. If you discover the shortfall and correct it within two years, the penalty may drop to 10%.
✏️ Hypothetical Example:
If your required distribution for the year is $10,000 but you withdraw only $7,000, the $3,000 shortfall could carry a 25% penalty ($750). If corrected within two years, the penalty may drop to 10% ($300).
📌 Also read: Everything You Need to Know About Missed RMDs
Does a Traditional IRA Have RMDs?
Yes. Traditional IRAs generally require RMDs starting at age 73. Withdrawals are taxed as ordinary income because contributions were made with pre-tax dollars.
Are RMDs from a Traditional IRA Taxed?
Yes. RMDs from a traditional IRA are generally included in your taxable income since contributions were pre-tax.
Does a Roth IRA Have RMDs?
No. Roth IRAs typically do not require RMDs during the original account holder’s lifetime. Your money can continue compounding tax-free, and you may pass the account to beneficiaries.
Other IRAs, including traditional, SEP, and SIMPLE IRAs, generally require RMDs starting at age 73.
Are RMDs from a Roth IRA Taxed?
Roth IRA distributions are generally tax-free if the original account holder held the account for at least five years. If the account has not reached the five-year mark, withdrawals may be subject to taxes.
Do SEP and SIMPLE IRAs Have RMDs?
Yes. Both SEP and SIMPLE IRAs generally require RMDs starting at age 73, whether you are an employer or employee.
📌 Also read: What Is a SEP IRA? (How It Works, Rules, Eligibility)
Are RMDs from SEP and SIMPLE IRAs Taxed?
Yes. Withdrawals are generally taxed as ordinary income because contributions are made with pre-tax dollars.
Does an Inherited IRA Have RMDs?
Yes. All inherited IRAs, including Roth IRAs, generally require RMDs. Roth IRAs do not have RMDs for the original owner, but beneficiaries must take distributions.
Failure to take an inherited IRA RMD may result in the same 25% (or 10%) excise tax mentioned above.
The rules vary depending on your relationship to the original account holder and the type of IRA.
If You Inherit an IRA from Your Spouse
You have several options:
✅ Spousal Transfer: As the sole beneficiary, you may transfer the assets into your own IRA. Traditional IRA rules start at age 73, while Roth IRAs do not have RMDs.
✅ Inherited IRA Option: You can delay RMDs until the later of:
- December 31 of the year after your spouse’s death, or
- The year your spouse would have reached age 73.
After that, distributions are based on your life expectancy.
✅ 10-Year Method: You may transfer funds into an inherited IRA and spread withdrawals over 10 years. The account must be emptied by December 31, ten years after your spouse passes. Roth IRA distributions remain tax-free if the account has been held for at least five years.
✅ Lump-Sum Distribution: You may take the entire account at once. Roth IRA distributions are tax-free if the account meets the five-year holding requirement.
If You Inherit an IRA from a Non-Spouse
You must determine your beneficiary type:
- Eligible Designated Beneficiary: Includes minor children, disabled or chronically ill individuals, or someone less than 10 years younger than the original account holder. RMDs are based on life expectancy.
- Designated Beneficiary: Any named individual who is not a spouse. Must withdraw all funds within 10 years.
- Non-Designated Beneficiary: Trusts, estates, or charities. Typically must withdraw all funds within five years.
What Is the 5-Year Rule?
There are two key 5-year rules for inherited IRAs:
- Roth IRA Earnings Rule:
Distributions from an inherited Roth IRA are generally tax-free if the original account holder held the account for at least five years. Contributions may be withdrawn at any time without taxes or penalties. - Withdrawal Timing Rule:
If an IRA has no named beneficiary, the estate must withdraw all funds within five years of the original account holder’s death.
How Do I Calculate RMD Amounts?
To calculate your RMD, the IRS takes your traditional IRA balance as of December 31 of the prior year and divides it by your life expectancy factor.
Your life expectancy factor can be viewed using our RMD table or by using the table displayed below:
Age | Life Expectancy Factor | Percentage of Account Balance |
72 | 27.4 | 3.65% |
73 | 26.5 | 3.78% |
74 | 25.5 | 3.93% |
75 | 24.6 | 4.07% |
76 | 23.7 | 4.22% |
77 | 22.9 | 4.37% |
78 | 22 | 4.55% |
79 | 21.1 | 4.74% |
80 | 20.2 | 4.96% |
81 | 19.4 | 5.16% |
82 | 18.5 | 5.41% |
83 | 17.7 | 5.65% |
84 | 16.8 | 5.96% |
85 | 16 | 6.25% |
86 | 15.2 | 6.58% |
87 | 14.4 | 6.95% |
88 | 13.7 | 7.30% |
89 | 12.9 | 7.76% |
90 | 12.2 | 8.20% |
91 | 11.5 | 8.70% |
92 | 10.8 | 9.26% |
93 | 10.1 | 9.91% |
94 | 9.5 | 10.53% |
95 | 8.9 | 11.24% |
96 | 8.4 | 11.91% |
97 | 7.8 | 12.83% |
98 | 7.3 | 13.70% |
99 | 6.8 | 14.71% |
100 | 6.4 | 15.63% |
101 | 6 | 16.67% |
102 | 5.6 | 17.86% |
103 | 5.2 | 19.24% |
104 | 4.9 | 20.41% |
105 | 4.6 | 21.74% |
106 | 4.3 | 23.26% |
107 | 4.1 | 24.40% |
108 | 3.9 | 25.65% |
109 | 3.7 | 27.03% |
110 | 3.5 | 28.58% |
111 | 3.4 | 29.42% |
112 | 3.3 | 30.31% |
113 | 3.1 | 32.26% |
114 | 3 | 33.34% |
115 | 2.9 | 34.49% |
116 | 2.8 | 35.72% |
117 | 2.7 | 37.04% |
118 | 2.5 | 40.00% |
119 | 2.3 | 43.48% |
120+ | 2 | 50.00% |
📌 Source: Publication 590-B (2024), Distributions from Individual Retirement Arrangements (IRAs) | IRS
Final Thoughts
Required minimum distributions help ensure that tax-advantaged retirement accounts are used as intended and prevent indefinite tax-free growth. Most IRAs, including traditional, SEP, and SIMPLE IRAs, generally require annual withdrawals starting at age 73. Roth IRAs are typically an exception for the original account holder, but inherited Roth IRAs still require distributions.
Missing an RMD may trigger substantial IRS penalties, so careful planning and timely withdrawals are important.
Understanding your options for inherited IRAs, including spousal transfers, the 10-year method, and lump-sum distributions, can help you manage taxes effectively while staying compliant with IRS rules.
📌 For more insights on retirement planning and tax strategies, explore our other articles to deepen your understanding of IRAs, 401k plans, and retirement income options.
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