What Is RBD for IRA Accounts and How Does It Work?

For those with an Individual Retirement Account (IRA), knowing when to start required minimum distributions (RMDs) is essential. The Required Beginning Date (RBD) sets the deadline for these withdrawals, and missing it can lead to significant tax penalties.

Rules vary depending on account type and whether the IRA was inherited. Understanding these details helps ensure compliance with IRS regulations and avoids costly mistakes.

Determining the RBD for Traditional IRAs

The RBD for a Traditional IRA is the deadline by which an account holder must begin RMDs. This date is based on age, with specific thresholds set by the IRS.

For Traditional IRA owners, the RBD is April 1 of the year after reaching the required age. The SECURE Act of 2019 raised this age from 70½ to 72, and the SECURE 2.0 Act of 2022 increased it to 73 for those born between 1951 and 1959. For individuals born in 1960 or later, the RBD is based on age 75.

Delaying the first RMD until April 1 of the following year can result in two taxable distributions in the same year, potentially pushing the individual into a higher tax bracket. Some retirees take their first RMD in the year they reach the required age to spread out the tax impact.

RBD for Inherited IRAs

For inherited IRAs, RMD rules depend on the beneficiary’s relationship to the deceased and whether the original account holder had begun RMDs.

The SECURE Act of 2019 introduced a 10-year rule for most non-spouse beneficiaries, requiring the entire account balance to be withdrawn within ten years of the original owner’s death. Annual withdrawals are not required, but any remaining balance after ten years incurs a 25% penalty.

Spousal beneficiaries have more flexibility. They can treat the inherited IRA as their own, delaying distributions until their own RBD. Alternatively, they may take distributions based on their life expectancy, allowing for smaller withdrawals over time. This is beneficial if the surviving spouse is younger than the original account holder.

Certain eligible designated beneficiaries—such as minor children, disabled or chronically ill individuals, and those not more than 10 years younger than the original owner—can use the life expectancy method for distributions. However, once a minor child reaches the age of majority, the 10-year rule applies.

Age Thresholds and Distribution Tables

The amount required to be withdrawn each year is determined using IRS distribution tables based on life expectancy. The most commonly used table, the Uniform Lifetime Table, applies to most IRA owners and divides the prior year-end account balance by a life expectancy factor.

For individuals with a spouse more than 10 years younger who is the sole beneficiary, the Joint Life and Last Survivor Expectancy Table is used. This method results in lower annual withdrawals, as it accounts for the longer combined life expectancy of both individuals.

The Single Life Expectancy Table is primarily used by certain beneficiaries of inherited IRAs. Unlike the other tables, which adjust annually, this table requires beneficiaries to determine their initial life expectancy factor in the year following the original owner’s death and reduce it by one each subsequent year.

Penalties for Missing the RBD

Failing to take the required minimum distribution (RMD) by the RBD results in a 25% excise tax on the amount that should have been withdrawn. If corrected within the IRS’s correction window, the penalty may be reduced to 10% if the missed distribution is taken and Form 5329 is filed.

A missed RMD increases the account balance, leading to larger required withdrawals in future years. This can push retirees into higher tax brackets, reduce eligibility for tax credits, and increase Medicare premiums due to income-based surcharges under IRMAA (Income-Related Monthly Adjustment Amount). The financial impact extends beyond the initial penalty, affecting long-term tax planning and retirement income strategies.