RMD (Required Minimum Distribution)
RetirementThe minimum amount retirees must withdraw annually from tax-deferred retirement accounts starting at age 73 (SECURE 2.0).
Example
Example: At age 73, you have $800,000 in your Traditional IRA. Using the IRS Uniform Lifetime Table (divisor of 26.5 at age 73), your first-year RMD is $800,000 / 26.5 = $30,189. This amount is added to your taxable income. If you do not withdraw it, the penalty is 25% of the missed amount ($7,547). Roth IRAs have no RMDs, which is a significant advantage.