Glossary
Required Minimum Distribution
A required minimum distribution (RMD) is the amount the IRS requires owners of traditional retirement accounts to withdraw each year beginning at a set age, so the deferred taxes finally come due.
The amount is the prior year-end balance divided by an IRS life-expectancy factor, recalculated annually. SECURE 2.0 raised the starting age (73 for those reaching it in the current era, rising later to 75) and reduced the penalty for missed RMDs. Roth IRAs have no lifetime RMDs for the owner, and Roth workplace accounts no longer do either; inherited accounts follow separate, often faster, rules.
Why it matters in practice
RMDs can force taxable income a retiree does not need, raising Medicare premiums and the tax on Social Security. That is why the years between retirement and RMD age — often lower-tax years — are the classic window for Roth conversions, and why qualified charitable distributions appeal to charitably inclined owners once RMDs begin.
Related terms: Traditional IRA · SECURE 2.0 · Qualified Charitable Distribution · Tax-Deferred · Roth IRA