9.4 Required Minimum Distributions (RMDs)
Key Takeaways
- SECURE Act 2.0 RMD ages: Born 1951-1959 = age 73; Born 1960+ = age 75; Required Beginning Date is April 1 of the year AFTER reaching RMD age
- First-year "double RMD" trap: Delaying first RMD to April 1 means TWO distributions in one tax year (April 1 + December 31)
- RMD calculation: Prior year-end account balance divided by life expectancy factor from IRS Uniform Lifetime Table (age 73 factor = 26.5)
- Roth IRAs have NO RMDs during owner's lifetime; Roth 401(k)s are also RMD-exempt starting 2024 under SECURE Act 2.0
- Missed RMD penalty is 25% (down from 50%); 10% if corrected within 2 years. QCD limit rises to $108,000 per person for 2025 (up from $105,000); one-time QCD to charitable gift annuity / CRT is $54,000.
Required Minimum Distributions (RMDs) are the minimum amounts that retirement account owners must withdraw annually from tax-deferred accounts once they reach a certain age. The SECURE Act 2.0 (enacted December 2022) and the IRS final regulations released in July 2024 made significant changes to RMD rules that are tested on the 2026-2027 EA SEE.
RMD Age Requirements Under SECURE Act 2.0
The RMD starting age depends on your birth year:
| Birth Year | RMD Starting Age | First RMD Year Example |
|---|---|---|
| Before July 1, 1949 | 70-1/2 | Already past RMD age |
| July 1, 1949 – December 31, 1950 | 72 | Already past RMD age |
| 1951 – 1959 | 73 | Turn 73 in 2025 → first RMD year 2025 |
| 1960 or later | 75 | Turn 75 in 2035 → first RMD year 2035 |
Note: The IRS clarified that individuals born in 1959 have an RMD age of 73 (not 75), resolving earlier ambiguity in the statute.
Required Beginning Date (RBD)
The Required Beginning Date (RBD) is the deadline for taking your first RMD:
RBD = April 1 of the year FOLLOWING the year you reach RMD age
2025 Examples:
- Born January 15, 1952: Turns 73 in 2025 → First RMD due by April 1, 2026
- Born December 20, 1960: Turns 75 in 2035 → First RMD due by April 1, 2036
The First-Year "Double RMD" Trap
If you delay your first RMD to April 1 of the following year, you must still take your second RMD by December 31 of that same year, resulting in two RMDs in one tax year:
| Year | Action | Taxable in |
|---|---|---|
| Year 1 (turn RMD age) | Can delay first RMD | — |
| Year 2 (following year) | First RMD by April 1 | Year 2 |
| Year 2 (same year) | Second RMD by December 31 | Year 2 |
EA Exam Tip: This "double RMD" year can push a taxpayer into a higher tax bracket. The exam may test whether delaying the first RMD is advantageous.
Accounts Subject to RMDs
RMDs are REQUIRED from these accounts:
- Traditional IRA
- SEP-IRA
- SIMPLE IRA
- 401(k) (pre-tax)
- 403(b)
- 457(b) governmental plans
- Profit-sharing plans
- Defined benefit plans
RMDs are NOT required from these accounts during owner's lifetime:
- Roth IRA — No RMDs while owner is alive
- Roth 401(k), Roth 403(b), Roth 457(b) — Starting 2024, these are RMD-exempt (SECURE Act 2.0)
SECURE 2.0 Change: Before 2024, Roth 401(k)s required RMDs. Starting in 2024, designated Roth accounts in employer plans are exempt from lifetime RMDs, aligning them with Roth IRAs. This change remains in effect for the 2025 tax year.
Calculating Your RMD
RMD Formula:
RMD = Account Balance (as of December 31 of prior year) ÷ Life Expectancy Factor
Which Life Expectancy Table to Use?
| Situation | Table to Use |
|---|---|
| Standard RMD (you are the owner) | Uniform Lifetime Table |
| Spouse is sole beneficiary AND more than 10 years younger | Joint Life Table (longer factors) |
| Inherited IRA beneficiary | Single Life Expectancy Table |
Uniform Lifetime Table (Excerpt)
| Age | Life Expectancy Factor | Approximate % Withdrawn |
|---|---|---|
| 73 | 26.5 | 3.77% |
| 74 | 25.5 | 3.92% |
| 75 | 24.6 | 4.07% |
| 76 | 23.7 | 4.22% |
| 77 | 22.9 | 4.37% |
| 78 | 22.0 | 4.55% |
| 79 | 21.1 | 4.74% |
| 80 | 20.2 | 4.95% |
| 85 | 16.0 | 6.25% |
| 90 | 12.2 | 8.20% |
| 95 | 8.9 | 11.24% |
2025 RMD Calculation Example
Facts: John, age 75, has a Traditional IRA worth $500,000 as of December 31, 2024. He is calculating his 2025 RMD.
Calculation:
$500,000 ÷ 24.6 (factor for age 75) = $20,325.20 RMD
John must withdraw at least $20,325.20 by December 31, 2025.
Aggregation Rules for RMDs
IRAs (Can Aggregate)
- Calculate RMD for EACH Traditional IRA separately
- Can withdraw the total RMD amount from ONE or MORE IRAs
- Same rule applies to inherited IRAs (from same decedent)
Employer Plans (Cannot Aggregate)
- Each 401(k), 403(b), etc. must satisfy its OWN RMD
- Cannot take RMD from one plan to satisfy another
- (403(b) accounts are aggregated with other 403(b) accounts; this is the long-standing exception.)
Still-Working Exception (Employer Plans Only)
If you are still employed by the employer sponsoring the plan, you may delay RMDs from that specific plan until retirement.
Requirements:
- Must be currently employed (not just part-time eligible—must be actively working)
- Cannot own more than 5% of the company
- The plan document must permit the delayed RMD option
- Applies only to the current employer's plan—not old 401(k)s or IRAs
Does NOT apply to IRAs: You cannot delay RMDs from Traditional IRAs, SEP-IRAs, or SIMPLE IRAs by continuing to work.
Penalty for Missed RMDs
Under SECURE Act 2.0, the penalty for failing to take an RMD was reduced:
| Penalty Type | Rate | When Applied |
|---|---|---|
| Standard penalty | 25% | Of the RMD amount not withdrawn (down from 50%) |
| Reduced penalty | 10% | If corrected within the 2-year "correction window" |
Correction Window
- 2-Year Period: From December 31 of the year the RMD was missed until the end of the second year following
- Example: Miss 2025 RMD → Correction window ends December 31, 2027
How to Correct
- Take the missed distribution as soon as possible
- File Form 5329 with your tax return
- Request penalty waiver (IRS may grant for reasonable cause)
Qualified Charitable Distributions (QCDs) — 2025
A Qualified Charitable Distribution (QCD) allows taxpayers to donate directly from their IRA to a qualified charity:
| Feature | 2025 Rules |
|---|---|
| Age requirement | 70-1/2 (not 73)—can start BEFORE RMDs are required |
| Annual limit | $108,000 per person (up from $105,000 in 2024; inflation-adjusted) |
| One-time QCD to split-interest entity (charitable gift annuity, charitable remainder trust) | $54,000 in 2025 (lifetime, indexed) |
| Counts toward RMD | Yes—satisfies RMD for the year |
| Tax treatment | Excluded from gross income (not reported as income) |
| Eligible accounts | Traditional IRA, inherited IRA, inactive SEP/SIMPLE |
| NOT eligible | 401(k), 403(b), active SEP/SIMPLE |
QCD Benefits
- Reduces AGI (unlike itemized charitable deductions)
- May reduce Medicare IRMAA surcharges
- May reduce the taxable portion of Social Security benefits
- Available even if taxpayer takes standard deduction
EA Exam Tip: QCDs must be made directly to a qualifying 501(c)(3) charity. Transfers to donor-advised funds or private foundations do NOT qualify (the $54,000 one-time exception covers only certain split-interest entities).
Inherited IRAs and the 10-Year Rule
The SECURE Act (2019) eliminated the "stretch IRA" for most beneficiaries who inherit after 2019. The 10-year rule now applies to most non-spouse beneficiaries. The IRS issued final regulations in July 2024 that clarified how annual RMDs interact with the 10-year rule.
Beneficiary Categories
| Beneficiary Type | Distribution Requirement |
|---|---|
| Spouse | Can treat as own, rollover, or remain beneficiary; use life expectancy |
| Minor child (of deceased) | Life expectancy until age 21, then 10-year rule |
| Disabled/Chronically ill | Life expectancy |
| Less than 10 years younger than deceased | Life expectancy |
| All other beneficiaries ("designated beneficiaries") | 10-year rule |
10-Year Rule Details (Final IRS Regulations, July 2024)
If original owner died BEFORE their RBD:
- Beneficiary must withdraw ALL funds by end of 10th year after death
- No annual RMDs required during the 10-year period
- Can take distributions in any pattern
If original owner died ON or AFTER their RBD ("at-least-as-rapidly" rule):
- Beneficiary must take annual RMDs during the 10-year period (based on the beneficiary's single life expectancy, fixed at inheritance), AND
- Must withdraw the ENTIRE balance by end of year 10
- IRS transition relief: No penalty for missed RMDs in 2021-2024 (Notices 2022-53, 2023-54, 2024-35).
Important: 2025 Is When Annual RMDs Resume
Beginning in 2025, designated beneficiaries who inherited from someone who died ON or AFTER their RBD must take annual RMDs during the 10-year window. The IRS's penalty relief expired with the 2024 tax year; the 25% (or reduced 10%) excise tax now applies in full for missed 2025 RMDs.
RMD Summary Table
| Account Type | RMDs During Owner's Lifetime? | RBD |
|---|---|---|
| Traditional IRA | Yes | April 1 after turning 73/75 |
| SEP-IRA | Yes | April 1 after turning 73/75 |
| SIMPLE IRA | Yes | April 1 after turning 73/75 |
| 401(k) Pre-Tax | Yes (unless still working) | April 1 after turning 73/75 or retirement |
| Roth IRA | No | N/A |
| Roth 401(k) | No (starting 2024) | N/A |
OBBBA Senior Bonus Deduction (Retirement Income Planning)
The One Big Beautiful Bill Act (signed July 4, 2025) added a $6,000 per-senior bonus deduction for taxpayers age 65 or older, available 2025-2028. The deduction phases out 6% above MAGI of $75,000 (Single/HoH) / $150,000 (MFJ) and is fully gone by $175K / $250K. MFS taxpayers are NOT eligible. The bonus stacks on top of the existing $2,000 (Single/HoH) / $1,600 (MFJ each spouse) additional standard deduction for age 65+ and is available to both standard-deduction filers and itemizers. RMD planning that keeps MAGI under the phase-out thresholds (e.g., QCDs that reduce AGI) can preserve more of this benefit.
EA Exam Tips
Memorize the birth year cutoffs: 1951-1959 = age 73; 1960+ = age 75.
RBD is April 1 of the FOLLOWING year—not December 31 of the year you turn the RMD age.
Double RMD year: If you delay the first RMD to April 1, you'll have two taxable RMDs in one year.
Uniform Lifetime Table key factors: Age 73 = 26.5; Age 75 = 24.6.
Still-working exception: Applies to employer plans ONLY, not IRAs, and requires less than 5% ownership.
Roth 401(k) change: No lifetime RMDs starting 2024 (SECURE 2.0).
Missed RMD penalty: 25% (reduced from 50%), or 10% if corrected within 2 years.
QCDs 2025: Age 70-1/2, up to $108,000 annually (up from $105,000), counts toward RMD, reduces AGI. One-time CGA/CRT QCD up to $54,000.
Inherited IRA 10-year rule: Most non-spouse beneficiaries must empty account by end of year 10. If decedent died ON/AFTER RBD, annual RMDs are required during the 10-year window starting in 2025 (IRS relief expired).
Margaret was born on March 15, 1952. Under SECURE Act 2.0, what is her Required Beginning Date (RBD) for taking her first RMD?
Robert has a Traditional IRA worth $400,000 as of December 31, 2024. He turns 75 in 2025. Using the Uniform Lifetime Table factor of 24.6 for age 75, what is his 2025 RMD?
Linda, age 73, missed her 2025 RMD of $18,000 from her Traditional IRA. She corrects the error by taking the full distribution in March 2026. What penalty will she owe under SECURE Act 2.0?