retirement
Required Minimum Distribution (RMD)
A required minimum distribution (RMD) is the minimum amount the IRS requires you to withdraw from traditional retirement accounts (401k, traditional IRA) each year starting at age 73.
RMDs are calculated annually based on your account balance and a life-expectancy factor from the IRS's Uniform Lifetime Table. Failing to take an RMD incurs a 25% excise tax on the amount not withdrawn (reduced to 10% if corrected promptly).
Roth IRAs and Roth 401(k)s have no RMD requirement during the owner's lifetime, making them attractive for estate planning. RMDs are taxed as ordinary income in the year withdrawn.
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Open calculator →Related terms
- 401(k)
- A 401(k) is a US employer-sponsored retirement savings account. Contributions are pre-tax (traditional) or post-tax (Roth), grow tax-deferred or tax-free, and benefit from compound growth over decades.
- Roth IRA
- A Roth IRA is a US individual retirement account funded with after-tax dollars. Investments grow tax-free, and qualified withdrawals in retirement are completely tax-free.
- Safe Withdrawal Rate (SWR)
- The safe withdrawal rate is the maximum percentage of a retirement portfolio you can withdraw annually without running out of money over a given time horizon. The 4% rule is the most widely cited guideline.
Frequently asked questions
What is Required Minimum Distribution (RMD)?
A required minimum distribution (RMD) is the minimum amount the IRS requires you to withdraw from traditional retirement accounts (401k, traditional IRA) each year starting at age 73.