If you have a traditional IRA or 401(k), the IRS eventually requires you to take money out. This yearly withdrawal is called a Required Minimum Distribution, or RMD.
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With RMD Deadline December 31 approaching, this guide explains who must withdraw, how to avoid a penalty, and what mistakes to watch for.
What Is an RMD?
An RMD is the minimum amount you must withdraw each year from tax-deferred retirement accounts. You must take it whether you need the money or not.
Who Has to Take an RMD Deadline December 31?
Most account owners must begin at age 73. The age rises to 75 for people born in 1960 or later. It is 73 for those born from 1951 to 1959.
RMDs apply to these accounts: Traditional, Rollover, SIMPLE, and SEP IRAs, most 401(k) and 403(b) plans, and most small-business retirement accounts. fidelity
Roth IRA owners still do not have lifetime RMD requirements.
When Is the Deadline?
After your first required distribution, future RMDs must generally be taken by December 31 each year. taxslayer
Your first RMD works differently. You can wait until April 1 of the year after you turn 73. But there is a catch: waiting means taking two RMDs in that same year, one in April and one by December 31. That can push you into a higher tax bracket, so talk to a tax professional before you delay. fidelityfidelity
What Is the Penalty for Missing an RMD?
The penalty is 25% of the amount you failed to withdraw, reduced to 10% if you correct the mistake and file Form 5329 within two years. retireplancalc
Simple example: if your RMD is $8,000 and you withdraw nothing, the penalty could be $2,000. Older rules had a 50% penalty, so many retirees still remember the higher number.
How Is Your RMD Calculated?
Your RMD is generally your account balance on December 31 of the previous year, divided by a life expectancy factor from IRS tables.
Example (illustrative only): $100,000 ÷ 25.0 = $4,000
Your real factor depends on your age. Use the IRS worksheet or calculator, or ask your account provider to calculate it.
Year-End RMD Checklist
- Confirm your age and birth year to see if you’re required to withdraw
- List every eligible account (IRAs, 401(k)s, 403(b)s)
- Get last December 31’s balance for each account
- Calculate your RMD or ask your provider
- Check if you already withdrew part of it this year
- Decide on tax withholding. RMDs are taxed as ordinary income
- Withdraw early, not on December 30. Delays and processing time can cause trouble
- Keep a record of the date and amount
Common RMD Mistakes
Waiting until the last week. Year-end processing can be slow. Give yourself extra days.
Forgetting an account. Old 401(k)s from previous jobs are easy to overlook.
Assuming one account covers all. Rules differ by account type. IRAs can generally be combined for the total, but 401(k)s are generally calculated per plan. Confirm with your provider or tax professional.
Forgetting taxes. An RMD adds to your taxable income for the year.
Panic selling. You can often take the RMD in cash or in kind. Ask your provider about options.
Watch Out for Year-End Scams
December is when some people receive urgent calls about “avoiding RMD penalties” or “moving your retirement money to a safer place.” Be careful.
- Don’t give account numbers to unsolicited callers
- Never move retirement funds under pressure
- Contact your provider using the phone number on your official statement
For more on protecting your money, read our guide on what to do if your bank calls you for personal info.
FAQs
At what age do RMDs start?
73 for most people today, and 75 for those born in 1960 or later.
What is the RMD deadline?
December 31 each year. Your first RMD can wait until April 1 of the following year.
What if I missed my RMD?
Withdraw the missed amount as soon as possible and file Form 5329. The penalty may be reduced to 10% if you correct it within the allowed period.
Do Roth IRAs have RMDs?
No, not for the original owner.
Can I take more than the minimum?
Yes, but extra withdrawals cannot be counted toward a future year’s RMD.
Final Thoughts
RMDs are simple once you know the dates. Check your accounts early, withdraw before the last week of December, and keep a record.
This article is general information, not personal tax or financial advice. Please confirm your numbers with the IRS, your account provider, or a qualified tax professional.
