Overview
- RMDs start in the year you turn 73, with the first withdrawal due by April 1 of the following year and all subsequent withdrawals due by December 31.
- Failing to take the full required amount triggers a 25% excise tax on the shortfall, which may be reduced to 10% if the error is corrected.
- Vanguard research estimates missed RMDs can total as much as $1.7 billion in penalties annually, with about 7% of its IRA holders missing in 2024 and average penalties topping $1,100.
- RMDs apply to tax-deferred accounts such as traditional IRAs and many workplace plans because withdrawals are taxed after years of upfront tax benefits.
- Plan providers often calculate and flag RMDs for 401(k)s, but IRA owners are typically on their own, so setting up automatic distributions with a brokerage can help prevent mistakes.