- A required minimum distribution is a rule set by the IRS where you must start taking mandatory withdrawals from your retirement account once you reach the age of 73. You must take distributions each year until your account is emptied.
- A Roth IRA has no minimum required distribution (RMD) rules for the original account holder. You can keep your Roth IRA compounding tax-free as long as you’re alive.
- If you pass, beneficiaries who inherit your Roth IRA will have 10 years to withdraw all the funds from the account. However, there are a few exceptions depending on who inherits the account.
Most retirement plans require that you start taking distributions once you reach the age of 73. You must withdraw at least the minimum amount each year, until your account is emptied.
A Roth IRA has no RMD rules for the account owner, and you can keep your money compounding tax-free in your account as long as you’re alive. However, if you hand your Roth IRA assets to your beneficiaries, they’ll generally need to eventually start taking RMDs.
Here’s everything you need to know about Roth IRA RMD rules.
The Roth IRA Handbook
Everything you need to know about investing and optimizing your wealth with a Roth IRA
What is an RMD?
Required minimum distributions are a mandatory distribution that you must take each year from your retirement plan that kicks in when you reach 73 years of age. Most retirement plans have an RMD rule, but a Roth IRA does not.
When do you need to start taking RMDs?
You must start taking RMDs when you reach the age of 73. For your first RMD, you have until April 1, the year after you turn 73 years old. Future RMDs must be taken by December 31, every year until your account is fully withdrawn.
How much am I required to withdraw every year?
The amount that you must withdraw increases as you get older. It uses a complex calculation that takes your account balance as of December 31 from the preceding year, and divides it by your life expectancy factor.
To calculate your RMD, find your age in the RMD table and the corresponding life expectancy factor. Get your account balance from December 31 from last year and divide it by your life expectancy factor. The result would be the dollar amount you’ll be required to withdraw for that year.
To calculate your required minimum distribution amount, use the RMD table below.
| Age | Life Expectancy Factor | Percentage of Account Balance |
|---|---|---|
| 72 | 27.4 | 3.44% |
| 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 | 2.4 | 40.00% |
| 119 | 2.3 | 43.48% |
| 120+ | 2 | 50.00% |
What if I don’t take my RMD?
The penalties for failing to take your RMD are steep. If you miss the deadline, you’ll have to pay a 50% tax on the amount you were required to withdraw.
Also read: Everything You Need To Know About Missed RMD’s
Roth IRA RMD Rules
As stated earlier, a Roth IRA has no required minimum distribution (RMD) rules for the original account owner because you don’t owe any taxes to the IRS when you take withdrawals from a Roth IRA.
With a Roth IRA, you pay taxes up front when you make contributions to your account. Money that you deposit into your Roth IRA must be made with after-tax income. In retirement, because you already paid taxes on your contributions, withdrawals are completely tax-free. Therefore, there is no requirement that you must take withdrawals as long as you’re alive.
On the other hand, other retirement accounts like a traditional IRA or 401k do have RMD rules since contributions are made with pre-tax income and withdrawals are taxed as ordinary income. It doesn’t make sense for the IRS to let you defer your taxes until the day you pass, since people would essentially just use it as a vehicle for tax evasion!
Also read: Roth IRA Withdrawal Rules & Penalties Explained
RMD rules for Inherited Roth IRAs
While a Roth IRA has no RMD rules for the original account owner, inherited Roth IRAs come with 10-year rule. But there are exceptions, depending on who inherits your Roth IRA.
A Roth IRA is one of the best ways to pass your assets down to your heirs since withdrawals from inherited Roth IRAs can also be withdrawn tax-free by your beneficiaries. However, after a beneficiary receives an inherited Roth IRA, the account must be fully emptied by the end of the 10 year following the year of death of the original owner.
There are a few beneficiaries who are exempted from the 10-year rule:
- Your spouse
- Your minor child (the 10-year rule kicks in when they reach the age of majority)
- Students can delay the start of the 10-year rule until they reach the age of 26
- Anyone who is not more than 10 years younger than you
- Disabled
- Chronically ill
These beneficiaries are not required to deplete the account within 10 years and can take annual RMD payments based on their own life expectancy. They have until December 31, the year after the original owner’s death to start taking RMDs. However, if the original account owner was required to take an RMD in the year of death, but couldn’t, then the beneficiary must take the RMD for them.
Rules for spouses
Spouses have the most flexibility when it comes to how to treat your inherited Roth IRA. They could either assume ownership of your Roth IRA or choose to be treated as a beneficiary. Each option comes with different withdrawal rules and largely depends on when you were supposed to take your RMD and if you were already taking RMDs.
Assuming ownership: Your spouse can do a spousal transfer of your Roth IRA assets into their own Roth IRA and will not have any RMD rules as long as they’re alive and decide to pass on their IRA to their beneficiaries. However, your spouse must be the sole beneficiary on the account in order to receive these exceptions, and they must treat the Roth IRA as their own, naming themselves as the account owner.
Treated as a beneficiary: If they don’t take over the account, they could also choose to just receive it as a beneficiary, which would change the RMD rules further. Instead of assuming ownership of the Roth IRA, they would need to choose whether to begin taking RMDs based on their own life expectancy or by December 31, the year after the original account owner passes.
Do withdrawals from inherited Roth IRAs have taxes?
As long as the original account had their Roth IRAs for at least 5 years (known as the 5-year rule), all distributions of earnings from the account will be tax-free. A Roth IRA lets you withdraw contributions at any age without penalties or taxes, and this carries over to the beneficiary as well. Even if the Roth IRA is not 5 years old, your beneficiaries can withdraw the contributions from the account tax-free.