When Do I Have to Start Taking Money Out of My IRA?

An Individual Retirement Arrangement (IRA) is a tax-advantaged savings account that allows funds to accumulate over a person’s working years. The Internal Revenue Service (IRS) has established regulations that govern these accounts, including mandates for when account holders must begin taking withdrawals. These rules ensure that tax-deferred savings are eventually used for retirement and that the corresponding taxes are paid.

Determining Your Required Beginning Date

The age you must begin taking withdrawals from your IRA is determined by your birth year, based on federal legislation like the SECURE Act and SECURE 2.0 Act. If you were born in 1950 or earlier, you were already required to take distributions under previous rules. For those born between 1951 and 1959, the age to start required minimum distributions (RMDs) is 73. For individuals born in 1960 or later, the age to begin RMDs increases to 75, effective in 2033.

The deadline for your first RMD is called the Required Beginning Date (RBD), which is April 1 of the year following the year you reach your RMD age. For example, if you turn 73 in 2025, your RBD for your first withdrawal is April 1, 2026.

While the first RMD can be delayed until April 1 of the following year, all subsequent RMDs must be taken by December 31 of each calendar year. Delaying your first RMD means you will take two distributions in the same calendar year: the first-year RMD by April 1 and the second-year RMD by December 31. This can result in a higher taxable income for that year, potentially pushing you into a higher tax bracket.

The rules for workplace retirement plans, such as a 401(k), can differ. Participants in these plans may be able to delay their RMDs until the year they retire, unless they are a 5% owner of the business sponsoring the plan. For traditional IRAs, the withdrawal mandate is tied directly to age, regardless of employment status.

Calculating the Required Withdrawal Amount

To calculate the amount you must withdraw, you will use a formula based on your account value and an IRS life expectancy factor. The formula is the prior year-end fair market value of your IRA divided by a life expectancy factor from the IRS’s Uniform Lifetime Table.

First, you need the value of your IRA on December 31 of the preceding year, which your IRA custodian provides on Form 5498. For instance, to calculate your 2026 RMD, you would use the account balance from December 31, 2025.

Next, consult the IRS Uniform Lifetime Table to find the distribution period for your age. For example, a 74-year-old has a distribution period of 25.5 years. If your IRA balance was $300,000 on December 31, 2025, and you are 74 in 2026, you would divide $300,000 by 25.5. This results in an RMD of $11,764.71 for 2026. You may withdraw more than the RMD, but any excess does not apply toward future RMDs.

Rules for Different Types of IRAs

The RMD rules apply to Traditional, Simplified Employee Pension (SEP), and Savings Incentive Match Plan for Employees (SIMPLE) IRAs. The owner must begin taking RMDs upon reaching the specified age. If you own multiple of these IRAs, you must calculate the RMD for each account separately. However, you can withdraw the total combined RMD amount from just one or any combination of your IRAs.

A significant distinction exists for Roth IRAs, as the original owner is not required to take any minimum distributions during their lifetime. This allows the funds within a Roth IRA to continue growing tax-free. The absence of lifetime RMDs provides greater flexibility for estate planning and managing taxable income in retirement.

The rules change for inherited IRAs. Beneficiaries are subject to their own set of distribution rules, and most non-spouse beneficiaries who inherit an IRA must deplete the entire account within ten years of the original owner’s death. For inherited Roth IRAs, while the distributions are tax-free, this 10-year rule still applies to most beneficiaries.

Penalties for Missed Withdrawals

Failing to take a required withdrawal by the deadline results in a penalty. The IRS imposes a 25% excise tax on the portion of the RMD that was not withdrawn. The tax applies only to the shortfall, not the entire account balance.

If the account holder corrects the mistake by withdrawing the required amount, the penalty can be lowered from 25% to 10%. To qualify for this reduction, the correction must be made before the IRS assesses the penalty or by the end of the second year after the RMD was due.

To report and pay the penalty, you must file IRS Form 5329 with your annual federal income tax return for the year the RMD was missed. It is also possible to request a waiver of the penalty. This is done by filing Form 5329 and attaching a letter explaining that the failure to withdraw was due to a reasonable error and that you are taking steps to fix it.