Everything You Need to Know About RMDs

Key Takeaways

• RMDs begin at age 72 using an IRS formula: divide your December 31st prior-year balance by a divisor from the Uniform Lifetime Table—divisors shrink yearly, forcing larger distributions and potentially creating a 'tax bomb' in later years
• IRAs can be aggregated together to calculate one combined RMD, but 403(b)s, 401(k)s, 457s, and Roth 401(k)s must each have separate RMDs—failure to follow aggregation rules correctly can result in over-withdrawals
• If still working at 72+ for your current employer, you can defer RMDs from that employer's plan, but you must remain employed through December 31st of that year; rolling over former employer plans into your current plan can defer all RMDs
• Inherited IRAs must be completely emptied within 10 years (per the SECURE Act), and strategic timing of withdrawals across years 8-10 can minimize taxes if you're also retiring during that window
• When you have deferred annuities with guaranteed withdrawal benefits, those withdrawals can count toward your aggregate IRA RMD requirement, potentially reducing what you must withdraw from other IRAs—consolidate accounts and automate RMDs to avoid missing deadlines and triggering the 50% excise tax penalty