Required minimum distribution (RMD)

Tax-deferred accounts can't grow untaxed forever. Starting at your RMD age (73 if you were born in or before 1959, and 75 if you were born later), you must withdraw at least a minimum amount every year, and that withdrawal is taxed as ordinary income.

Each year's RMD is last December 31's account balance divided by a life-expectancy factor from the IRS Uniform Lifetime Table. The factor shrinks as you age, so the required share of the account rises each year.

Missing an RMD triggers an excise tax of 25% of the shortfall, cut to 10% if you fix it promptly. A Roth IRA has no RMDs while the owner is alive, and neither do Roth 401(k)s from 2024.