Key Points
-
In general, anyone with a tax-deferred retirement account must take withdrawals called required minimum distributions (RMDs) beginning at age 73.
-
RMDs are calculated by dividing the retirement account balance from the prior year by a life expectancy factor (found on an IRS table) based on current age.
-
The 2025 RMD for a 73-year-old with $500,000 invested in a traditional IRA as of Dec. 31, 2024, will equal $18,867.92.
- The $23,760 Social Security bonus most retirees completely overlook ›
Tax-deferred accounts, like traditional individual retirement accounts (IRAs) and 401(k) plans, let workers delay taxes on qualified distributions, provided they meet income-based eligibility requirements. However, the government will not let you withhold those tax payments indefinitely.
Upon reaching a certain age, individuals with tax-deferred retirement accounts must begin taking required minimum distributions (RMDs), meaning they must withdraw a percentage of the account balance each year. At that point, the contribution and any investment gains are subject to income tax.
Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »
Read on to learn more about RMDs, including when they begin and how to calculate the withdrawal amount for a retirement account with a balance of $500,000.
Image source: Getty Images.
Which account types are subject to required minimum distributions (RMDs)?
A required minimum distribution (RMD) is the smallest amount of money that retirees must withdraw from tax-deferred accounts each year. RMD rules apply to account holders and beneficiaries with the following plans:
- Traditional IRAs
- SEP IRAs
- SIMPLE IRAs
- Traditional 401(k) plans
- Traditional 403(b) plans
- 457(b) plans
Importantly, RMD rules do not apply to Roth accounts while the original owner is alive, but beneficiaries of Roth accounts must abide by RMD rules.
In general, account holders must take RMDs by Dec. 31 each year. The only exception is that the first RMD can be postponed until April 1. For instance, anyone who turned 73 in 2025 could delay their first RMD until April 1, 2026. However, all subsequent RMDs must be completed by Dec. 31.
At what age do required minimum distributions (RMDs) begin?
The age at which required minimum distributions begin depends on when you were born. Details are provided in the chart below:
Account Holder’s Birth Date
Age When RMDs Begin
Before July 1, 1949
70 ½
July 1, 1949, to Dec. 31, 1950
72
Jan. 1, 1951, to Dec. 31, 1959
73
After Dec. 31, 1959
75
Data source: Internal Revenue Service. RMDs = required minimum distributions.
Anyone who does not take their RMD before the deadline will be penalized with an excise tax equal to 25% of the amount not withdrawn.