When Must You Start Taking IRA Distributions?

The Internal Revenue Service (IRS) requires individuals to begin withdrawing funds from most retirement savings accounts upon reaching a certain age. These mandatory withdrawals are known as Required Minimum Distributions (RMDs). The purpose of RMDs is to ensure the government receives tax revenue from these tax-deferred vehicles, where money has grown without being taxed annually. RMD rules dictate when that tax deferral must end.

Determining Your Required Beginning Date

The specific age at which you must start taking RMDs depends on your date of birth, a timeline modified by federal legislation. This trigger age determines your Required Beginning Date (RBD), the deadline for your first distribution. Your RBD is April 1 of the year that follows the calendar year in which you reach the RMD age, while subsequent RMDs must be taken by December 31 of each year.

Recent laws, including the SECURE Act of 2019 and the SECURE 2.0 Act of 2022, created a tiered age system. If you were born between January 1, 1951, and December 31, 1959, your RMDs must begin at age 73. For example, a person turning 73 in 2025 has an RBD of April 1, 2026, to take their first RMD for the 2025 tax year. For those born on or after January 1, 1960, the RMD age increases to 75.

While you can delay your first RMD until April 1 of the next year, this decision has tax consequences. If you choose this option, you will be required to take two distributions in that single year: the first RMD (for the prior year) by April 1, and the second RMD (for the current year) by December 31. Taking two distributions in one year could push you into a higher income tax bracket, so careful planning is advised.

Identifying Accounts Subject to RMDs

RMD requirements apply to tax-deferred accounts where contributions and earnings have not yet been taxed. These include Traditional Individual Retirement Arrangements (IRAs), Simplified Employee Pension (SEP) IRAs, and Savings Incentive Match Plan for Employees (SIMPLE) IRAs.

The rules also apply to the pre-tax portions of employer-sponsored retirement plans like 401(k)s, 403(b)s, and 457(b)s. However, if you are still working for the company sponsoring the plan past your RMD age and do not own 5% or more of the business, you can delay RMDs from that plan until you retire. This “still-working” exception does not apply to any type of IRA.

A distinction exists for Roth accounts. The original owner of a Roth IRA or a designated Roth account within an employer plan (like a Roth 401(k)) is never required to take RMDs during their lifetime. RMD rules do apply to beneficiaries who inherit any type of Roth account.

For individuals with multiple IRAs (Traditional, SEP, or SIMPLE), a specific aggregation rule applies. While you must calculate the RMD amount separately for each IRA you own, you are permitted to withdraw the total combined RMD amount from just one of those IRAs or any combination of them. This provides flexibility in managing your withdrawals and investment portfolio.

How to Calculate and Take Your RMD

To calculate your annual RMD, you divide the prior year’s December 31 account balance by a life expectancy factor from the IRS. This factor represents the average number of years a person at your age is expected to live.

You can find your life expectancy factor in the tables in IRS Publication 590-B. Most account owners use the Uniform Lifetime Table. A separate Joint Life and Last Survivor Expectancy Table is used if your spouse is the sole beneficiary of your IRA and is more than 10 years younger than you.

For example, imagine an individual who turned 74 in 2025 and had a Traditional IRA balance of $250,000 on December 31, 2024. According to the Uniform Lifetime Table, the distribution period for a 74-year-old is 25.5 years. The RMD for 2025 would be calculated as $250,000 divided by 25.5, which equals approximately $9,803.92. This is the minimum amount that must be withdrawn by December 31, 2025.

The distribution can be taken in cash or as an in-kind distribution, where securities are transferred from the IRA to a taxable brokerage account. The fair market value of the securities on the transfer date is considered taxable income.

Penalties for Failure to Take RMDs

Failing to withdraw the full RMD amount by the annual deadline results in a penalty. The IRS imposes an excise tax on the shortfall, which is the difference between the amount you were required to withdraw and the amount you actually took.

Under rules from the SECURE 2.0 Act, the penalty is 25% of the RMD shortfall. This represents a reduction from the previous 50% penalty. The penalty can be further reduced to 10% if the account owner corrects the mistake in a timely manner by withdrawing the missed RMD amount and filing the appropriate tax form within a two-year correction window.

To address a missed RMD, you must file IRS Form 5329, Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts. You can also use this form to request a waiver of the penalty if you can show the failure was due to a reasonable error and you are taking steps to fix it.

To request a waiver, you must file the form, withdraw the required amount, and attach a letter explaining the error. The IRS may accept reasons such as illness, errors by the financial institution, or other events beyond your control.