New Rules for Required Minimum Distributions (RMDs): What Retirees Need to Know Now

If you have a traditional IRA, 401(k), 403(b), or another tax‑deferred retirement account, Required Minimum Distributions (RMDs) are one of the most important rules you’ll deal with in retirement. Recent law changes have shifted when RMDs start, how some beneficiaries take them, and what happens if you make a mistake.

Understanding these new RMD rules can help you:

• Avoid unnecessary tax penalties
• Better plan how long your savings might last
• Coordinate withdrawals with Social Security, pensions, and other income

This guide walks through the new RMD age rules, updated penalties, beneficiary changes, and practical planning tips, all in plain language.

What Are RMDs and Why Do They Exist?

Required Minimum Distributions (RMDs) are the minimum amounts you must withdraw each year from certain retirement accounts once you reach a specific age.

They generally apply to:

• Traditional IRAs
• SEP IRAs
• SIMPLE IRAs
• Most employer plans (401(k), 403(b), 457(b)), unless an exception applies
• Some inherited retirement accounts

They do not apply to:

• Roth IRAs during the original owner’s lifetime
• Roth 401(k) and similar Roth employer plans (for RMD years after 2023, explained later)

Governments allow tax‑deferred growth in these accounts as an incentive to save, but eventually they require withdrawals so that taxes are paid on those savings.

The New RMD Starting Ages: 70½ → 72 → 73 → 75

One of the biggest recent changes to RMDs is when you have to start taking them.

How the RMD age has changed over time

Historically, RMDs started at:

• Age 70½ for people who reached that age before 2020

Then, laws changed the starting age:

• Age 72 for many people who reached 70½ in 2020 or later
• Age 73 now applies to people hitting certain birth‑year ranges
• Age 75 will apply to certain younger generations in the future

Current RMD age rules in simple terms

As of now, the general framework looks like this:

• If you were already taking RMDs under the old 70½ rule, nothing changed for you.
• If you were born in the late 1940s or early 1950s, age 72 or 73 likely applies.
• People born after the mid‑1960s will likely have an RMD age of 75.

The exact year‑of‑birth cutoffs are set in law, and the Internal Revenue Service publishes detailed tables and examples that show who falls under which age. The main idea is that RMDs start later than they did a decade ago, giving many savers more years of tax‑deferred growth.

When your first RMD is actually due

RMD timing has two pieces:

1. “RMD age” (72, 73, or 75 depending on your situation)
2. The deadline for the first withdrawal

You must take:

• Your first RMD by April 1 of the year after you reach your RMD age.
• Your second RMD (and all future ones) by December 31 each year.

This means that in the first year, you can delay that first RMD into the next calendar year—but then you’ll take two RMDs in that same year (the delayed first one and the regular second one). That timing can have tax consequences, because it may bunch income into one year.

Which Accounts Are Affected by the New RMD Rules?

Not every account is treated the same. The updated RMD rules affect several types of retirement accounts in slightly different ways.

Traditional IRAs

• Still subject to RMDs starting in the year you reach your applicable RMD age.
• RMDs are calculated based on your prior year’s December 31 balance and your life expectancy factor from official tables.
• Each IRA’s RMD is calculated separately, but if you hold multiple traditional IRAs, you can generally take the total RMD from any one or a combination of those IRA accounts.

Employer plans: 401(k), 403(b), 457(b)

• RMDs typically start at your applicable RMD age.
• Important twist: If you are still working and do not own a significant share of the company (commonly described as a small ownership percentage limit in law), some employer plans let you delay RMDs from your current employer’s plan until you actually retire.
• This “still‑working exception” does not automatically apply to old 401(k)s from former employers or to IRAs.
• If you have multiple employer plans, each plan’s RMD must be taken from that specific plan, except in some cases with 403(b) accounts where aggregation may be allowed.

Roth IRAs and Roth employer plans

Here the rules have become more favorable for many savers:

• Roth IRAs (original owner)
  • No RMDs required during the original owner’s lifetime.
• Roth 401(k) and similar plans
  • In years before 2024, RMDs typically applied.
  • For RMD years starting after 2023, Roth employer plan accounts generally no longer have RMDs for the original owner, putting them on more similar footing with Roth IRAs.
  • Many people choose to roll Roth 401(k) balances into a Roth IRA when they leave a job or retire, which can simplify RMD considerations.

New RMD Rules for Inherited Accounts

RMD rules for beneficiaries also changed significantly. These changes mostly affect people inheriting IRAs or employer plan balances from someone who passed away recently.

“Stretch” IRAs vs. 10‑Year Rule

In the past, many non‑spouse beneficiaries could take small RMDs over their own life expectancy. This approach, sometimes referred to as a “stretch IRA” strategy, allowed funds to stay tax‑deferred for decades.

Newer laws now limit this for many beneficiaries:

• For a wide group of non‑spouse beneficiaries, the entire inherited account typically must be emptied by the end of the 10th year after the original owner’s death.
• This is often called the 10‑year rule.
• In some cases, annual RMDs during the 10 years are also required, depending on whether the original owner had reached their RMD start age and other specific factors.

Eligible Designated Beneficiaries (EDBs)

Some beneficiaries are treated more favorably and may still be allowed to use a longer payout period. Common examples include:

• A surviving spouse
• A minor child of the account owner (usually only until they reach the age of majority, after which the 10‑year rule generally kicks in)
• Certain beneficiaries who are not much younger than the account owner
• Certain beneficiaries who qualify under disability or chronic condition definitions in the law

These individuals are often referred to as “eligible designated beneficiaries”. They may have the option to:

• Take RMDs over their own life expectancy, or
• Use alternate methods depending on plan terms and the timing of the original owner’s RMD status.

Spousal beneficiaries: special flexibility

Surviving spouses often have the widest range of choices, including:

• Treating the inherited IRA as their own IRA, which can shift the RMD age to the survivor’s timeline
• Remaining as a beneficiary of the IRA and using life expectancy tables for beneficiaries
• In some cases, delaying RMDs until the deceased spouse would have reached their RMD age

Which path is best depends on the surviving spouse’s age, other income sources, and how soon they might need access to the funds.

Updated Penalties for Missing or Underpaying RMDs

One of the most widely discussed changes to RMD rules involves penalties. In the past, missing an RMD could trigger a very steep penalty—a significant percentage of the amount that should have been withdrawn.

A more forgiving penalty structure

Recent law changes have:

• Reduced the standard penalty percentage on the missed amount.
• Created a system where the penalty can be further reduced if the error is corrected quickly and properly reported.

This does not make RMDs optional, but it does recognize that confusion and miscalculations happen, especially as rules adjust and people manage multiple accounts.

Correcting an RMD mistake

If someone misses or underpays an RMD:

1. They typically need to take the missed distribution as soon as the error is discovered.
2. They may submit information to the tax authorities explaining the reasonable cause for the mistake and showing that it has been corrected.
3. If accepted, the penalty can be waived or further reduced.

The goal of the newer rules is to be less punitive for honest mistakes, especially when addressed promptly.

How RMD Amounts Are Calculated

While the “new rules” mostly concern timing and penalties, it’s also helpful to understand how the actual dollar amount of an RMD is determined.

The basic formula

For most account owners, the RMD is:

Prior year’s December 31 balance ÷ life expectancy factor

The life expectancy factor comes from official tables. There are several standardized tables depending on your situation, such as:

• Uniform Lifetime Table – for most account owners
• Joint Life and Last Survivor Table – often used if a much younger spouse is the sole beneficiary
• Single Life Table – often used for beneficiary accounts

Each table assigns a factor based on age. As you get older, the factor typically shrinks, meaning your required percentage withdrawal increases over time.

Practical implications

• If your account balance is high relative to the life expectancy factor, your RMD can be a significant percentage of your account.
• Market performance matters: a strong market year raises your December 31 balance and therefore increases the next year’s RMD, while a poor year may reduce it.
• Having multiple accounts can make tracking RMDs more confusing, especially if you hold both IRAs and employer plans.

How the New RMD Rules Affect Roth Accounts

Roth accounts have a unique place in the RMD landscape.

Original owners

• Roth IRAs still have no RMDs for the original owner.
• Roth 401(k) and similar plans now generally follow the same approach for RMD years after 2023:
  • For many participants, no RMD is required during the original owner’s lifetime from Roth employer accounts, as long as the updated law applies.

This means many retirees can:

• Keep Roth assets in place for tax‑free growth (subject to holding period and qualified distribution rules), and
• Choose whether or not to convert or roll over based on flexibility and simplicity, rather than strictly to avoid RMDs.

Beneficiaries of Roth accounts

Beneficiaries of Roth IRAs and Roth employer plans:

• Are often still subject to inherited account RMD rules, including the 10‑year rule for many non‑spouse beneficiaries.
• Typically do not owe income tax on qualified Roth distributions, even though withdrawals may be required by law on a set schedule.

So, while Roth accounts can help reduce taxable income in retirement, they don’t always eliminate timing rules for heirs.

Coordinating RMDs With Your Retirement Income Plan

The newer RMD rules do more than adjust timelines. They also change how people think about retirement income strategy.

Why the later RMD age matters

The shift from 70½ to 72, then to 73 and eventually 75 for some, means:

• More years for tax‑deferred growth
• More flexibility in deciding when to draw from which accounts
• More time where some retirees may have relatively low taxable income between stopping work and starting RMDs

During those “gap years,” some individuals explore strategies such as spreading out withdrawals, potentially managing their tax bracket, or coordinating with Social Security claiming decisions. The best choice varies by household.

Balancing RMDs with other income sources

RMDs often sit alongside:

• Social Security benefits
• Pension income
• Annuity payments
• Part‑time work income
• Taxable investment account withdrawals

Since RMDs represent forced income for tax purposes, they can:

• Push someone into a higher tax bracket in a particular year
• Affect how much of their Social Security is taxed
• Influence costs tied to income thresholds in some systems, such as certain premium surcharges or credits

Understanding RMD timing helps people stagger or adjust other income sources when possible.

Practical RMD Tips Under the New Rules

To make the most of the updated landscape, many retirees and near‑retirees find it helpful to adopt a few practical habits.

🧾 RMD checklist: key points to track

• Know your RMD age under the newer rules.
• List every account subject to RMDs (traditional IRAs, old 401(k)s, 403(b)s, etc.).
• Confirm which accounts have the “still‑working” exception if you’re employed past your RMD age.
• Mark your RMD deadlines:
  • First RMD: April 1 of the year after your RMD age year.
  • All other RMDs: December 31 of each year.
• Track beneficiary designations and whether they fall into favored categories such as eligible designated beneficiaries.
• If you have Roth employer accounts, verify whether RMDs still apply or have been eliminated for your situation.

Quick Reference: Key RMD Changes at a Glance

Here is a simplified summary of some major RMD changes and their impact:

This table doesn’t capture every nuance, but it highlights the direction of change: later start ages, more structured rules for heirs, and slightly more flexible treatment of errors.

Common RMD Questions Under the New Rules

Do I owe RMDs if I am still working past my RMD age?

• IRAs: Yes, RMDs generally still apply once you reach your RMD age, even if you’re working.
• Current employer’s 401(k) or similar plans: Many plans allow you to delay RMDs until retirement if you are still working and don’t own a large share of the employer, but this is not universal.
• Old employer plans: RMDs usually cannot be delayed based on your current employment.

Can I combine RMDs across different account types?

• Traditional IRAs: You can generally aggregate the total RMD and withdraw it from one or more of your traditional IRAs.
• Employer plans (401(k), 403(b), etc.): RMDs are typically calculated and paid separately from each plan, with only limited exceptions.
• IRAs vs employer plans: RMDs from IRAs and employer plans cannot be combined; each category must satisfy its own RMD requirement.

What if I convert to a Roth IRA—do I still have an RMD?

• If you are already subject to RMDs from a traditional IRA or employer plan, the year’s RMD usually must be taken first; you typically cannot convert that RMD amount to a Roth.
• After that, future growth in the Roth IRA is generally not subject to RMDs during your lifetime.
• Conversions can change the tax profile of future withdrawals, but they also create taxable income in the conversion year, so timing matters.

How the New RMD Rules Affect Different Life Stages

RMD changes affect not only those already taking distributions but also younger savers and mid‑career workers.

Pre‑retirees (10–20 years from retirement)

For people still in their 50s or early 60s, the newer RMD ages:

• Give more clarity on when taxable forced withdrawals will start.
• Encourage thinking about which accounts to build (traditional vs Roth) based on expected tax brackets later.
• Highlight how beneficiary rules may impact children or other heirs who might face the 10‑year rule.

New retirees in their 60s or early 70s

Those who have recently left the workforce often focus on:

• Deciding when to start Social Security relative to RMDs.
• Considering whether to consolidate older employer plans into IRAs or roll over to a current plan to use a still‑working exception (if available and still employed part‑time).
• Evaluating whether to spread withdrawals over early retirement years rather than waiting until RMDs begin.

Long‑time retirees in their 70s and 80s

For people who already rely heavily on retirement accounts:

• The higher RMD age may have a limited effect if they were already taking more than the minimum to cover living expenses.
• The revised penalty structure may provide some reassurance if a small RMD error occurs.
• The 10‑year rule for beneficiaries may influence choices around leaving taxable, tax‑deferred, or Roth assets to heirs.

Simple Habits to Stay on Top of RMDs

Because RMD rules are technical and keep evolving, many people adopt a few straightforward practices to reduce stress.

✅ Helpful habits

• Set calendar reminders: Mark recurring dates for RMDs every November or early December, with a separate note for the April 1 first‑year option if it applies.
• Use one main RMD account: Some retirees move most of their tax‑deferred savings into one IRA to simplify calculations and withdrawals, while still staying diversified inside that account.
• Review beneficiary forms regularly: Life events like marriage, divorce, births, and deaths can change who is best suited to inherit and how RMDs will work for them.
• Check plan rules: Employer plans can have additional provisions that differ from IRAs, including whether they support still‑working exceptions, partial rollovers, or in‑plan Roth features.

Bringing It All Together

The new rules for Required Minimum Distributions reflect a broader shift in retirement policy:

• RMDs now start later, giving retirees more flexibility in early retirement.
• Roth employer plans are treated more like Roth IRAs, with fewer forced withdrawals for original owners.
• Beneficiary rules are more structured, especially for non‑spouse heirs, often requiring accounts to be emptied within 10 years.
• Penalties for mistakes are less severe, but RMDs remain a central part of retirement account taxation.

For anyone with a tax‑deferred retirement account, understanding these changes helps in:

• Coordinating when to tap different savings pools
• Managing taxable income across retirement years
• Making thoughtful decisions about beneficiaries and legacy planning

The rules can be detailed, but the core idea is straightforward: governments eventually require you—and sometimes your heirs—to draw down tax‑deferred savings on a schedule. Staying informed about the evolving RMD landscape is one of the most practical ways to keep your retirement strategy aligned with current law and with the life you want to live in retirement.