Getting Started With Required Minimum Distributions
Learn the basics about starting and managing required minimum distributions (RMDs)
What are Required Minimum Distributions (RMDs)?
When you reach age 73¹, the IRS requires you to begin annual withdrawals from most retirement accounts (excluding Roth IRAs). These withdrawals are called required minimum distributions, or RMDs, and are generally included in your taxable income.
It's important to keep track of your RMDs and rules that may change. Each year's RMD must be taken by December 31, with the exception of your first year RMD. If you don't take them on time, or if you take less than the full amount, you may have to pay an IRS penalty tax.
We encourage you to set up an automatic withdrawal plan so you don't miss an RMD. You also have the option to keep your money working for you by reinvesting your withdrawal. Give us a call today to automate your RMDs.
What happens if you don’t take an RMD?
If you do not take your RMD by the deadline, or if the amount you take is not large enough, you may have to pay an IRS penalty tax on the amount not distributed as required. Effective January 1, 2023, the SECURE 2.0 Act lowered the IRS penalty tax from 50% to 25%, and allows a further reduction to 10% if you correct the RMD in a timely manner (generally within two years). You may be able to have the penalty waived altogether if you can prove to the IRS that the shortfall was due to reasonable error and steps have been taken to correct it.
If you have missed taking an RMD, we encourage you to contact your tax advisor to discuss your options.
What Accounts Require RMDs?
RMDs are required for the following accounts:
Traditional, Rollover, SEP, SARSEP and SIMPLE IRAs
403(b), governmental 457(b) and qualified retirement accounts
Designated Roth accounts in a 401(k), 403(b) and governmental 457(b) through 2023.
Beginning in 2024, RMDs are not required. First-year RMDs for 2023 that are not due until April 1, 2024, must still be withdrawn.Beneficiary accounts of one of the above account types have rules specific to inherited assets. Download the Distribution Options for details.
Note that RMDs are not required for Roth IRAs during the owner’s lifetime.
When is the deadline for taking RMDs?
Generally speaking, each year's RMD must be taken by December 31.
How is an RMD calculated?
Generally, a RMD is calculated for each account by dividing the prior December 31 balance of that account by a life expectancy factor that the IRS publishes in tables in Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs) .
Although IRS rules require a minimum distribution amount, you can take more than the RMD if you need the extra income.2 Any distribution is generally subject to taxes; therefore, please be sure to talk to your tax advisor about your needs as you plan your RMD.
If your RMD amount isn't shown on your account statement, call us and we’ll calculate it for you.3
What can I do with my RMD?
Are your expenses covered for the year, and you don’t need the RMD money right now? The money doesn’t have to sit in a checking or low-yielding savings account. Here are some ways to put that RMD to work for the future.
How do I request my RMD withdrawal?
To withdraw your RMD, you can call us (IRAs only), log in or use one of the forms below.
Traditional/Rollover IRAs
(Non-Brokerage)
Workplace Retirement Plans
(Non-Brokerage)
SEP/SARSEP/SIMPLE IRAs
- Call Us: 1-800-345-3533
- Complete a Form
403(b) Plans - Complete a Form
457(b) Plans - Complete a Form
Qualified Retirement Plans - Call Us: 1-800-345-3533
Brokerage IRAs
(Traditional/Rollover/SEP/SIMPLE IRAs)
- Call Us: 1-888-345-2071
- Complete a Form
Need help with your RMD?
We’re here to help.
The SECURE Act raised the RMD age from 70½ to 72 for individuals born after 6/30/1949. The SECURE 2.0 Act then raised the RMD age to 73 for individuals born in 1951-1959, and 75 for those born in 1960 or later.
For 403(b), governmental 457(b) and qualified retirement plan accounts, a second qualifying event is required to withdraw an amount greater than the RMD amount.
Not available for some qualified retirement plan accounts.
The earnings portion of non-qualified withdrawals is subject to federal and state income taxes and a 10% federal penalty.
Available for Traditional/Rollover IRAs. Available for SEP, SARSEP and SIMPLE IRAs under certain circumstances. Not available for other workplace retirement plans.
Please consult your tax advisor for more detailed information regarding the Roth IRA or for advice regarding your individual situation.
Taxes are deferred until withdrawal if the requirements are met. A 10% penalty may be imposed for withdrawal prior to reaching age 59½.
If withdrawals are made within the first two years of participation in the SIMPLE IRA, the penalty increases to 25%.
IRS Circular 230 Disclosure: American Century Companies, Inc. and its affiliates do not provide tax advice. Accordingly, any discussion of U.S. tax matters contained herein (including any attachments) is not intended or written to be used, and cannot be used, in connection with the promotion, marketing or recommendation by anyone unaffiliated with American Century Companies, Inc. of any of the matters addressed herein or for the purpose of avoiding U.S. tax-related penalties.
This information is for educational purposes only and is not intended as tax advice. Please consult your tax advisor for more detailed information or for advice regarding your individual situation.
This material has been prepared for educational purposes only. It is not intended to provide, and should not be relied upon for, investment, accounting, legal or tax advice.