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Required Distributions After Age 70½

If you're nearing retirement, you may already be thinking about how much money you'll need to live on in retirement. If you retire at or around age 65, you have flexibility for withdrawing money from your retirement plan. But once you reach age 70½, you are generally required to start taking some money out.

What is a Required Minimum Distribution (RMD)?

The RMD was created by the IRS to ensure individuals withdraw their retirement funds; and, as a result, pay taxes on their savings. While your retirement savings can be passed on to a beneficiary, the IRS rules were designed for people to withdraw the money from their retirement plan and pay taxes on it after reaching retirement age and before death.

When are you required to take an RMD?

RMDs are generally required to be taken each year by December 31 starting the year you reach age 70 ½. However, there are a few exceptions, including:

  • If you reach age 70½ and are still working, you can wait to start taking an RMD from any employer-sponsored plans until you retire, as long as you do not own more than 5% of the company you work for.
  • You may delay your first payment until April 1 of the year following the year in which you turned 70½.

The IRS will assess a tax of 50% on the amount not withdrawn if you don’t take your RMD, don’t  take the full amount of your RMD, or miss the deadline (December 31).

Do I have to take an RMD from my retirement plan?

The RMD rules apply to all employer-sponsored retirement plans, including:

  • Profit-sharing plans
  • 401(k) plans, including Roth 401(k)
  • 403(b) plans
  • 457(b) plans
  • IRA-based plans such as SEPs, SARSEPs, and SIMPLE IRAs

RMD rules also apply to Traditional IRAs.

Do RMDs apply to Roth IRAs?

RMDs do not apply to Roth IRAs until after the death of the IRA owner. The owner is treated as having died before his required beginning date, regardless of his age at death. If the surviving spouse is the sole beneficiary, the surviving spouse may delay distribution from the Roth IRA until the year in which the deceased owner would have reached age 70½. The surviving spouse may also treat the Roth IRA as his or her account. In this case, the RMDs would not be required until after the spouse's death.

Keep in mind RMDs are required for Roth 401(k) account balances.

How is an RMD amount calculated?

An RMD is calculated for each retirement plan account by dividing the account balance as of December 31 of the previous year, by a life expectancy factor that the IRS publishes in Tables in Publication 590-B.

Let’s take a look at an example of how a 401(k) plan participant might calculate their RMD. 

RMD example for 401(k) plan account
Account balance as of
December 31:
IRS life expectancy factor:*
RMD calculation:
$150,000/23.8= $6,302.52

* Assumes spouse is not 10 years younger than the account holder; see IRS Table III – Uniform Lifetime

If you have multiple IRAs, the "aggregation rule" allows you to calculate the RMD for each non-Roth IRA. The rule applies to all non-Roth IRAs (including SEP-IRAs and SIMPLE-IRAs). You can calculate the total RMD amount required to be taken from all your non-Roth IRAs, and then:

  • Choose to take the sum from only one of your non-Roth IRAs, or
  • Divide the RMD amount between your non-Roth IRAs

Roth IRAs are not aggregated with non-Roth IRAs because there is no requirement to take an RMD from a Roth IRA. Your individual circumstances may vary; therefore, you may want to seek guidance from a tax or financial advisor.

The aggregation rule also does not apply to qualified plans, like a 401(k) plan. If you have a 403(b) contract, you must calculate the RMD separately for each 403(b) contract that you own. With a 403(b), however, you can take the total amount from one or more of the 403(b) contracts. RMDs required from other types of retirement plans, such as 401(k) and 457(b) plans have to be taken separately from each of those plan accounts.

Can my spouse affect my payment amount?

If your spouse is your only beneficiary and is more than 10 years younger than you, you may choose to include your spouse’s age in your calculation to determine your RMDs. This may reduce your RMD amount and is allowed only if all of the following apply:

  • Your only designated beneficiary is your spouse.
  • Your spouse is more than ten years younger than you.
  • You want your spouse’s age considered in the calculation of your RMD.