How Required Minimum Distributions Affect Your Retirement Plan

For your whole working life and the first years of retirement, you decide when money leaves your retirement accounts. Required minimum distributions end that. Starting at age 73, the IRS requires you to pull a minimum amount out of your traditional retirement accounts every year and pay ordinary income tax on it, whether or not you need the cash to live on.

That single rule reshapes the back half of a retirement plan. It sets a floor under your taxable income, can raise the tax on your Social Security, and can lift your Medicare premiums years before you would have touched the money on your own. This covers when RMDs start, how the amount is figured, what happens if you miss one, and the moves that shrink the bill before it arrives.

The rule in one sentence

An RMD is the smallest amount you are legally required to withdraw from a tax-deferred account each year once you reach your starting age. The number is not a percentage someone picked. It is your prior year-end balance divided by a life expectancy factor the IRS publishes, so the withdrawal tracks how many years you are statistically expected to keep drawing.

When RMDs start: age 73 or 75

The SECURE 2.0 Act of 2022 raised the starting age and split it by birth year. If you were born between 1951 and 1959, your first RMD year is the year you turn 73. If you were born in 1960 or later, it moves to 75. Anyone who already began taking distributions under the older rules keeps going on the same schedule.

The first year carries a wrinkle worth planning around. You do not have to take that first distribution during your birthday year. You can defer it to as late as April 1 of the following year, the date the IRS calls your required beginning date. The catch is that the second RMD is still due by December 31 of that same year. Wait until April and you take two taxable distributions in one calendar year, which stacks the income and can push you into a higher bracket. Taking the first one on time, in the year you turn 73, usually spreads the income more evenly.

How the amount is calculated

Most retirees use the IRS Uniform Lifetime Table. You take each account's balance as of December 31 last year and divide by the factor for the age you reach this year. A separate table applies only if your sole beneficiary is a spouse more than ten years younger, which lowers the required amount.

Consider saver A, who turns 73 this year with $800,000 in a traditional IRA on last December's statement. The factor is 26.5, so the first RMD is $800,000 ÷ 26.5, about $30,200. Ten years later the factor for age 83 is 17.7, so the same $800,000 would require roughly $45,000. The required share of the balance rises from about 3.8% to 5.6% over that stretch, and it keeps climbing after that.

Because the percentage and, in good markets, the balance can both rise, the dollar amount the IRS forces out tends to grow through your seventies and eighties. That growing, taxable, non-optional withdrawal is the heart of why RMDs matter for a plan.

What happens if you miss one

Missing an RMD used to carry one of the harshest penalties in the tax code: 50% of the amount you failed to take. SECURE 2.0 cut that to 25%, and to 10% if you correct the shortfall within a two-year window and file the right form. It is still a penalty worth never triggering. The deadline for each year's distribution is December 31, apart from that first-year April 1 option, so the simplest safeguard is to schedule the withdrawal earlier in the year rather than the last week of December.

Which accounts the rule touches

RMDs apply to tax-deferred accounts: traditional IRAs, 401(k)s, 403(b)s, the federal Thrift Savings Plan, and SEP and SIMPLE IRAs. The common thread is that you deducted the contributions or deferred the tax going in, so the IRS eventually wants its share.

Roth accounts are treated differently. A Roth IRA has never required distributions during the owner's lifetime, and as of 2024 a Roth 401(k) and Roth TSP no longer do either. That difference is one of the quieter arguments for holding Roth money, covered in our comparison of Roth versus traditional accounts.

The account type also changes how you satisfy the requirement. If you hold several IRAs, you calculate the RMD for each but can withdraw the total from any one of them. Workplace plans do not aggregate: each 401(k)'s RMD has to come out of that specific plan. Retirees who left a trail of old 401(k)s at former employers sometimes miss one for this reason, which is a practical case for consolidating accounts before 73.

How RMDs reshape your plan

The reason RMDs earn their own place in a plan is that they convert a balance you controlled into taxable income on a schedule you do not. Three effects follow from that.

The first is bracket pressure. A forced withdrawal in your eighties can land on top of Social Security and pension income and push the total into a higher marginal bracket than the one you planned around. The second is the Social Security interaction: an RMD raises the "combined income" figure that decides how much of your benefit is taxed, so a large distribution can drag more of your Social Security check into taxable territory. Our guide on how Social Security is taxed walks through that calculation. The third is Medicare. Part B and Part D premiums carry income-based surcharges, known as IRMAA, set from your tax return two years earlier, so a spike in RMD income can raise your premiums later.

There is a withdrawal-rate angle too. If you have been pacing your spending around a safe withdrawal rate, an RMD can force out more than you actually want to spend in a given year. Nothing requires you to spend it. You owe the tax, but the after-tax remainder can be reinvested in a taxable brokerage account, so the RMD is a tax event rather than a spending mandate.

Shrinking the bill before it starts

The years between retiring and your RMD start age are where most of the leverage sits. With wages gone and distributions not yet required, taxable income often dips, which opens room to move money out of tax-deferred accounts at a lower rate. Two tools do most of the work. Converting part of a traditional balance to Roth during those lower-income years shrinks the balance that future RMDs are calculated from, in exchange for paying tax now while your rate is low. And once you reach age 70½, a qualified charitable distribution lets you send money straight from an IRA to a charity, up to an annual cap that is indexed for inflation (it was $108,000 in 2025), where it counts toward your RMD but never enters your taxable income.

The bottom line

RMDs do not take your money. They decide when you pay the tax you deferred on it. Left unplanned, they can bunch that tax into your seventies and eighties, lift your bracket, and pull Social Security and Medicare costs up with them. Planned for, the deferral years before 73 become a window to convert and give at lower rates so the required withdrawals later land softer. Because the effect compounds over decades, the way to judge it is to model it. RetirFi applies the SECURE 2.0 RMD schedule at 73 or 75 inside its tax-aware drawdown, so you can run your own numbers and watch the forced withdrawals, and the taxes on them, move your probability of success.