Is the IRA 70 1/2 Rule Still in Effect?

For many years, age 70 ½ was a significant milestone for retirement planning. These mandatory withdrawals, known as Required Minimum Distributions (RMDs), were required from tax-deferred retirement accounts. The rule’s purpose is to ensure people use their retirement savings during their lifetime, preventing the indefinite deferral of income tax and supporting retirement rather than wealth transfer.

Determining Your Required Beginning Date

Recent legislation has altered the age for taking RMDs, so your specific starting age now depends on your birth year. The SECURE Act of 2019 first increased the age from 70 ½ to 72. The SECURE 2.0 Act of 2022 then further raised the age.

For individuals born between 1951 and 1959, the age to begin RMDs is 73. For those born in 1960 or later, the starting age is 75. Individuals who reached age 70 ½ before January 1, 2020, were subject to the old rules and must continue taking their RMDs.

Your “Required Beginning Date” (RBD) is the deadline for your first RMD, which is April 1 of the year after you reach your applicable RMD age. For every subsequent year, the RMD must be taken by December 31. These rules apply to a wide range of retirement plans, including:

• Traditional IRAs
• SEP IRAs
• SIMPLE IRAs
• 401(k)s
• 403(b)s

An exception is the Roth IRA, which does not require any distributions for the original account owner during their lifetime.

Calculating Your Required Minimum Distribution

To calculate your RMD, you must use the fair market value of your IRA as of December 31 of the preceding year. For example, your 2025 RMD calculation would use the account’s value from December 31, 2024.

Next, you will use a life expectancy factor from the IRS. Most account owners use the Uniform Lifetime Table in IRS Publication 590-B. This table provides a “distribution period” factor that corresponds to your age for the distribution year. The factor represents an average life expectancy according to IRS data.

The calculation is to divide the prior year-end account balance by the distribution period factor. For instance, a 73-year-old with an IRA valued at $200,000 on December 31 of the previous year would look at the Uniform Lifetime Table. If the distribution period for a 73-year-old is 26.5, the RMD would be $200,000 divided by 26.5, which equals approximately $7,547.

If you hold multiple Traditional IRAs, you must calculate the RMD for each one separately. After calculating the RMD for each account, add them together to find your total RMD for the year. You can then withdraw the total amount from a single IRA or from any combination of your IRAs.

Penalties for Failing to Take an RMD

Failing to withdraw the full RMD amount by the deadline can lead to a tax penalty, which the IRS imposes to enforce distribution rules. The penalty is calculated only on the amount of the RMD that was not taken, not the entire account balance.

The penalty for a missed RMD was historically 50% of the shortfall. The SECURE 2.0 Act reduced this penalty to a base of 25% of the amount that should have been withdrawn.

The law also allows for a penalty reduction to 10% if the missed RMD is corrected in a timely manner. This is defined as withdrawing the shortfall and filing the appropriate tax form by the end of the second year after the year the RMD was missed.

Correcting a Missed RMD

If you realize you have failed to take your full RMD for a year, your first action is to withdraw the shortfall amount. You should take this corrective distribution from your IRA as soon as you discover the error.

After taking the required withdrawal, the next step is to request a waiver of the penalty from the IRS by filing Form 5329. You will complete the relevant sections of this form to report the shortfall and request that the penalty be waived.

You must attach a letter to Form 5329 explaining why you missed the RMD. The letter should state that the failure was due to a reasonable error and that you have since taken the required distribution. The IRS may waive the penalty if it finds your reason valid and that you have taken corrective action.