Overview
- Required Minimum Distributions begin at age 73 under current IRS rules and are calculated by dividing the account balance by a life-expectancy factor from the IRS Uniform Life Table.
- On a $1 million traditional IRA, examples using IRS factors show annual RMDs of about $37,736 at 73, $40,650 at 75, $49,505 at 80, and $62,500 at 85.
- RMDs are taxed as ordinary income and failing to take the correct amount can trigger a severe penalty that the coverage reports can be as high as 25%.
- Advisers recommend strategies to reduce future RMDs and taxable income, including converting funds to a Roth IRA in low-tax years, taking some withdrawals before age 73, or using Qualified Charitable Distributions up to $111,000 in 2026.
- A significant share of households hold seven-figure retirement accounts, according to Fidelity data, which means many retirees face meaningful tax and planning choices and should weigh sequence-of-return risk when scheduling large withdrawals.