RMDs in Plain English: When They Start, How They're Figured, and Why They Sneak Up

For decades, the deal with your traditional IRA or 401(k) was simple: no tax now, tax later. Required minimum distributions are "later" arriving on a schedule. Once you hit the trigger age, the IRS requires you to withdraw — and pay ordinary income tax on — a minimum amount every year, needed or not.

When yours start

SECURE 2.0 set the current start ages by birth year:

• Born 1951–1959: RMDs begin the year you turn 73.
• Born 1960 or later: RMDs begin at 75.

You can delay only your first RMD, until April 1 of the following year — but then you take two in one year, which can spike your bracket. Most people take the first by December 31 for exactly that reason.

Which accounts: traditional IRAs, SEP and SIMPLE IRAs, and most workplace plans like 401(k)s and 403(b)s. Which don't: Roth IRAs (never, during your lifetime) and, since 2024, Roth 401(k)s. One wrinkle worth knowing: if you're still working at RMD age, your current employer's 401(k) is usually exempt until you retire — IRAs are not.

The math is one division

Take your account balance on December 31 of last year and divide it by a life-expectancy factor from the IRS Uniform Lifetime Table.

At 75, the factor is 24.6 — a $500,000 IRA requires about $20,325 out. The factor shrinks each year, so the required percentage climbs: roughly 4.1% of the balance at 75, 5% at 80, 6.3% at 85, 8.2% at 90. (If your spouse is more than ten years younger and your sole beneficiary, a different table lowers the requirement.)

Your custodian calculates the official figure and will happily withhold taxes from it. The RMD calculator projects yours for the next decade so nothing about the trajectory surprises you.

Why they sneak up on people

Nobody misses the existence of RMDs; what surprises people is the stacking. By your mid-70s you may have Social Security, perhaps a pension, and then RMDs arrive on top — all ordinary income. The combination can push you into brackets you thought you'd left behind, make up to 85% of your Social Security taxable, and trip Medicare IRMAA surcharge thresholds.

That's the real reason the decade before RMDs gets so much planning attention. Spending IRA dollars first, or converting slices to Roth during low-income years, shrinks the future balance being divided — and therefore every future RMD.

If you don't need the money

Three respectable options:

1. Reinvest it. Pay the tax, move the rest into a taxable brokerage account. The money keeps working; only its tax wrapper changes.
2. Give it directly. From age 70½, qualified charitable distributions send IRA money straight to charity — up to $108,000 per person in 2026 — counting toward your RMD while never touching your taxable income. For charitably-minded retirees this is usually the single most efficient giving tool available.
3. Fund the fun. An RMD is also permission: the money was always meant to be spent by someone. Being that someone is allowed.

Don't miss one

The penalty for a missed RMD is a 25% excise tax on the shortfall, reduced to 10% if corrected within two years. Custodians send reminders and most will automate the whole thing — set it up once and the deadline risk disappears.