What are Required Minimum Distributions?
An RMD is the minimum amount you must withdraw from your retirement accounts each year. This rule applies to traditional IRAs, SEP IRAs, SIMPLE IRAs, 401(k) plans, 403(b) plans, and 457(b) plans.
RMD Rules and Deadlines
- Age 73: Under the SECURE Act 2.0, the age to start RMDs increased to 73 for those who turn 72 after December 31, 2022.
- Calculations: The amount is calculated by dividing your account balance at the end of the previous year by a life expectancy factor from the IRS Uniform Lifetime Table.
- Penalties: Failing to take an RMD can result in a significant excise tax on the amount not withdrawn.