If you have money in retirement accounts, you may have to start taking required minimum distributions, or RMDs, when you turn 73 -- even if you don't need the money. Specifically, if you have money in tax-deferred retirement accounts, such as a traditional IRA, 401(k), or 403(b), the RMD rule applies. If you have Roth IRAs or other Roth-style accounts, you don't have to withdraw anything if you choose not to.
With tax-deferred accounts, you must take your first RMD by April 1 of the year after you turn 73. So, if you turn 73 this year, you'll have to take an RMD by April 1, 2026. However, be careful about delaying your first RMD, as waiting until the last minute will result in you taking two RMDs in the same calendar year, which can result in a big tax bill.
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How to calculate your RMD
Fortunately, the RMD calculation process is fairly straightforward. There are only two steps you need to do:
- First, look up your account balance as of Dec. 31 of the previous year. If you received a year-end statement, this information is likely on it.
- Divide this amount by your life expectancy factor, which can be found in IRS tables. Most people will use the Uniform Lifetime Table, but there's another table to be used only if your spouse is more than 10 years younger than you and is your sole beneficiary.
Here's how this works. Let's say you're turning 73 in 2025 and you have $500,000 in your 401(k). Based on the Uniform Lifetime Table, your life expectancy factor for the calculation is 26.5. Dividing $500,000 by this factor gives you an RMD of $18,868.
It's also worth noting that if you have more than one IRA, you can withdraw your RMD from any one account or a combination of accounts. The same rule applies to 403(b) accounts. However, with 401(k), 457(b), and other retirement accounts, you must take separate RMDs from each account.
