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Bottom Line Up Front

  • Account holders of retirement funds like 401(k)s and traditional IRAs must take their first RMD (required minimum distribution) by age 72. 
  • Roth IRAs are exempt from the RMD rule, and if you’re still employed at 72, you can delay paying a required minimum distribution. 

Time to Read

3 minutes

May 12, 2022

Reaching your 72nd birthday is cause for celebration. But thanks to a quirky tax rule, you must begin taking required minimum distributions (RMDs) from your tax-deferred retirement accounts—traditional IRAs, SEP IRAs, Simple IRAs, 401(k)s, etc.—beginning the year you reach age 72 (with the exemption of the first RMD, which has a deadline of April 1 the year following your birthday).1

Failure to make these mandatory minimum amount withdrawals by Dec. 31 each year can result in penalties, so if you or someone you know is approaching that threshold, read on.

Congress created IRAs, 401(k) plans and other tax-deferred retirement accounts to encourage people to save for their own retirement. You generally contribute "pre-tax" dollars to these accounts (except for Roth plans), which means the money and its investment earnings are not subject to income tax until withdrawn.

Congress has also decided that RMDs must be withdrawn—and taxed—each year after reaching age 72. If you neglect to take the RMD on time, you'll have to pay an excess accumulation tax equal to 50% of the RMD amount you should have taken, plus take the distribution and pay taxes on it, unless you meet certain narrow conditions.

In a few cases, you can delay or avoid paying an RMD:

  • If still employed at 72, you may delay RMDs from your 401(k) or other work-based accounts until you actually retire, without penalty; however, regular IRA accounts are subject to the rule, regardless of work status.
  • Roth IRAs are exempt from the RMD rule; however, Roth 401(k) plans are not.

Another way to circumvent the RMD is to convert your tax-deferred accounts into a Roth. You'll still have to pay taxes on pre-tax contributions and earnings, and, if over age 72, you must first take your minimum distribution (and pay taxes on it) before the conversion can take place.

Ordinarily, RMDs must be taken by Dec. 31 to avoid the penalty. However, if it's your first distribution, you may wait until April 1 of the year after turning 72, although you still must take a second distribution by Dec. 31 that same year.

Generally, you must calculate an RMD for each IRA or other tax-deferred retirement account you own by dividing its balance at the end of the previous year by a life expectancy factor found in one of the three tables in Appendix C of IRS Publication 590:

  • Use the Uniform Lifetime Table if your spouse isn't more than 10 years younger than you, your spouse isn't the sole beneficiary or you're single.
  • Use the Joint and Last Survivor Table when your spouse is the sole beneficiar and he/she is more than 10 years younger than you.
  • The Single Life Expectancy Table is for beneficiaries of inherited IRAs, accounts whose owner has died.

Although you must calculate the RMD separately for each IRA you own, you may withdraw the combined amount from one or more of them. The same goes for owners of one or more 403(b) accounts. However, RMDs required from 401(k) or 457(b) plans must be taken separately from each account.

Understanding how RMDs work can help you avoid penalties and make the most of your retirement savings. To learn more about RMDs, read IRS Publication 590 at or reach out to a financial advisor for help handling this part of your personal finances.

Key Takeaways Key Takeaways


1For IRA owners who turn 70½ on or after 1/1/2020.

This content is intended to provide general information and shouldn't be considered legal, tax or financial advice. It's always a good idea to consult a tax or financial advisor for specific information on how certain laws apply to your situation and about your individual financial situation.