What is a Required Minimum Distribution (RMD)?

A Required Minimum Distribution (RMD) is an IRS rule stating that retirees must begin taking a minimum amount of money out of their pre-tax retirement accounts each year once they reach a certain age. These accounts include Traditional IRAs, 401ks, SIMPLE IRAs, and SEP IRAs.

The purpose of this rule is simple: the IRS allows you to defer taxes on the money you contributed and the investment gains those contributions generated. But at some point, they want to collect taxes on those funds. That point begins when you reach the RMD age threshold.

When Do RMDs Begin?

For many years, RMDs began at age 70½, but recent legislation has pushed that age higher. The SECURE Act (passed in 2019) increased the age to 72, and the SECURE 2.0 Act (passed in 2022) raised it again. Currently:

If you were born before 1951, your RMD age is 72.
If you were born between 1951–1959, your RMD age is 73.
If you were born in 1960 or later, your RMD age will be 75.

Your first RMD must be taken by April 1st of the year following the year you reach your required age. After that, RMDs are due by December 31st each year.

How Are RMDs Calculated?

The amount you’re required to withdraw is based on your account balance at the end of the previous calendar year (December 31st) and a life expectancy factor determined by the IRS.

For example, in your first year, the IRS uses a factor of 27.4, which equates to about 3.65% of your account value. Each year, as your life expectancy shortens, the factor decreases. In other words, the required percentage you must withdraw increases each year. So for a simple example, using an account balance of $100,000:

RMD = Account Balance / IRS Life Expectancy Factor

Age 72: $100,000 / 27.4 = $3,649.64

Age 80: $100,000 / 20.2 = $4,950.50

If your investments continue to grow or remain stable, your annual RMDs will typically rise as you age.

Do Roth IRAs Require RMDs?

No. Roth IRAs are not subject to RMDs during the original account holder’s lifetime. Since Roth contributions are made with after-tax dollars, the IRS has already collected its share and does not care when you withdraw from them. This makes Roth IRAs a valuable planning tool for those who want to maintain flexibility and control over when they take distributions in retirement.

What Is the Biggest RMD Mistake Retirees Make?

The most common (and costly) RMD mistake is missing a required withdrawal. Failing to take your RMD by the deadline used to result in a hefty 50% penalty on the amount you should have withdrawn. However, under the SECURE 2.0 Act, the penalty has been reduced to 25%, and it can drop to 10% if corrected quickly.

Still, even a 10% penalty can be significant, and the income must be reported as taxable.

Other frequent RMD errors include:

Taking from the wrong account – If you have multiple retirement accounts, you must calculate your RMDs separately. Some accounts (like IRAs) can be combined, but others (like 401ks) cannot.
Forgetting inherited accounts – Beneficiaries often overlook inherited IRAs or 401ks that have RMD obligations under special distribution rules.
Not coordinating RMDs with tax planning – Large RMDs can push retirees into higher tax brackets or increase taxes on Social Security benefits.

The key to avoiding these mistakes is planning early: working with a fiduciary advisor to project your RMD amounts and integrate them into your broader income and tax strategy.

Do RMDs Affect Social Security?

Yes, indirectly. RMDs count as taxable income, which can increase your provisional income, or the IRS measure used to determine how much of your Social Security benefits are taxable.

If your combined income (including RMDs, wages, and half your Social Security benefits) exceeds certain thresholds, up to 85% of your Social Security benefits could become taxable.

For example:

If you’re single and your combined income is over $34,000, up to 85% of your benefits may be taxed.
For married couples filing jointly, that threshold is $44,000.

Strategically managing withdrawals before RMDs begin, such as converting portions of your IRA to a Roth IRA in your early retirement years, can help reduce future RMDs and potentially minimize taxes on Social Security benefits.

Managing RMDs as Part of a Broader Retirement Strategy

RMDs are more than just a requirement: they’re an important part of your overall retirement income plan. How and when you take them can affect your taxes, investment longevity, and Social Security benefits.

At Zynergy Retirement Planning, we help clients navigate RMD rules, minimize tax impacts, and coordinate distributions with other income sources. Proper planning ensures that your retirement savings work efficiently and that you stay compliant without unnecessary tax burdens.