Required Minimum Distribution (RMD)
RMDs are mandatory annual withdrawals from traditional IRAs and employer-sponsored retirement plans beginning at age 73 for people born 1951–1959 and age 75 for those born in 1960 or later under SECURE 2.0. Roth IRAs are exempt during the owner's lifetime. A 25% penalty applies for failure to take RMDs.
Exam Tip
RMD begins at 73. Penalty = 25% (10% if corrected). Roth IRA = no RMD for owner. Delaying first RMD to April 1 means two distributions in second year.
EA exam baseline: For the 2026–2027 SEE, use Tax Year 2025 and federal tax law through December 31, 2025. Later-year amounts below are explicitly labeled comparisons, not the default exam year. IRS SEE policy.
What are Required Minimum Distributions?
RMDs ensure tax-deferred retirement funds are eventually subject to income tax. SECURE 2.0 Act raised the beginning age to 73.
RMD Key Rules
| Rule | Detail |
|---|---|
| Beginning age | 73 for births 1951–1959; 75 for births 1960 or later |
| First RMD deadline | April 1 of year after turning 73 |
| Subsequent deadlines | December 31 each year |
| Penalty for failure | 25% excise tax (10% if corrected timely) |
| Calculation | Prior year-end balance / life expectancy factor |
Account Types and RMDs
| Account | RMD Required? |
|---|---|
| Traditional IRA | Yes, at 73 |
| 401(k), 403(b) | Yes (still-working exception) |
| Roth IRA | No (during owner's lifetime) |
| Roth 401(k) | No (SECURE 2.0 eliminated) |
| Inherited IRA | Yes (10-year rule for most beneficiaries) |
Exam Alert
RMD age is 73 under SECURE 2.0. Penalty is 25% (reduced to 10% if corrected within the statutory correction window, which ends at the earliest of a deficiency notice, assessment, or the end of the second following tax year). Roth IRAs have NO RMDs during owner's lifetime. First-year RMD can be delayed to April 1, but that means two RMDs in year two.
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Related Terms
Roth IRA
A Roth IRA is a retirement account funded with after-tax dollars that grows tax-free and allows tax-free withdrawals in retirement, with no required minimum distributions.
RMD (Required Minimum Distribution)
RMDs are required annual withdrawals from specified retirement accounts. The starting age and timing depend on birth year, account type, employment and beneficiary status; original-owner Roth accounts have no lifetime RMDs.
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