RMD
Personal FinanceDefinition
Required Minimum Distribution. Mandatory annual withdrawals from Traditional IRAs and 401(k)s starting at age 73 (rises to 75 in 2033). Calculated by dividing prior-year balance by an IRS life-expectancy factor.
Penalty for missing: 25% of the shortfall (was 50% pre-SECURE 2.0). Roth IRAs have no RMDs during the owner's lifetime — a major estate-planning advantage. Roth 401(k)s also exempted starting 2024.
Penalty for missing: 25% of the shortfall (was 50% pre-SECURE 2.0). Roth IRAs have no RMDs during the owner's lifetime — a major estate-planning advantage. Roth 401(k)s also exempted starting 2024.