Make Sure You’ve Met RMD Amounts

December 11, 2025

Once you reach age 73, the IRS requires you to begin taking Required Minimum Distributions (RMDs) from tax-deferred retirement accounts such as traditional IRAs, 401(k)s, and 403(b)s. These withdrawals are not optional—they’re mandated by law and taxed as ordinary income. Missing the deadline can result in steep penalties, currently up to 25% of the amount not withdrawn, making compliance critical.

Your RMD amount is calculated using your account balance as of December 31 of the previous year. While the rule is straightforward, how you satisfy your RMD can vary. Many retirees choose a lump-sum withdrawal at year-end, which allows funds to stay invested longer but can create a sudden tax spike. Alternatively, equal monthly or quarterly installments can smooth out cash flow.

There are also strategic options to consider. For example, Qualified Charitable Distributions (QCDs) can help satisfy your RMD while lowering taxable income. Another approach is Roth conversions, where you move funds from a traditional account to a Roth IRA, paying taxes now for tax-free withdrawals later. If you’re still working and don’t own more than 5% of your employer’s business, you may be able to defer RMDs from that plan. Ultimately, planning ahead and consulting a financial professional ensures you meet IRS requirements while optimizing your tax strategy and retirement income.