Traditional IRAs, 401(k)s, and other similar retirement accounts enable you to save money before taxes and watch it grow over time. However, the IRS eventually requires you to start withdrawing some of your savings each year. These withdrawals are referred to as required minimum distributions, or RMDs, and the amount you withdraw is taxed at your regular rate. Understanding the 2025 RMD rules could help you avoid penalties and better plan your retirement income.
Changing RMD Ages Under SECURE 2.0
Prior to recent legislative changes, retirees were required to begin taking RMDs in the year they turned 72, though the initial withdrawal could be postponed until the following April. The SECURE 2.0 Act, passed in 2022, changed this timeline so that retirees could keep their money in their accounts for a longer period of time. Beginning in 2023, the RMD age increased from 72 to 73. In 2033, the RMD age will rise to 75.
This means that depending on your birth year, your RMD starting age may differ from someone who is only a few years older or younger. These changes are intended to reflect longer life expectancy and provide more time for retirement savings to grow before mandatory withdrawals begin.
| Year | RMD Starting Age |
| Before 2023 | 72 |
| 2023-2032 | 73 |
| 2033 and Beyond | 75 |
Pay Attention to Deadlines
You have until December 31st of each year to complete your RMD (except for your first RMD, which can be taken on April 1st of the following year). However, the process is not automated. You typically have to contact your financial institution, fill out forms, and wait for the distribution to be processed. Many businesses set earlier internal deadlines because the end of the year generates enormous demand.
Failure to take your RMD on time may result in costly penalties. SECURE 2.0 reduced the traditional 50% penalty to 25%, and perhaps as low as 10% if the error is corrected within two years. Even with the lower penalty structure, withdrawing funds early is critical to avoid last-minute complications.
Roth Accounts and RMD Rules
A significant update for retirees concerns Roth workplace accounts. Roth IRAs have long been exempt from lifetime RMDs, so owners are never required to withdraw funds if they prefer to keep them invested. RMDs were once required for Roth 401(k) and Roth 403(b) accounts.
Beginning in 2024, all Roth accounts will adhere to the same rule: no RMDs during the original owner’s lifetime. This means that if you are over the age of 73 and have a Roth workplace plan, you are not required to take RMDs.
When the owner dies, Roth accounts, like other retirement accounts, are subject to RMD rules for heirs. The rules differ depending on whether the beneficiary is a spouse, minor child, or other type of inheritor. Some heirs must deplete the account within ten years, whereas spouses may have more flexible withdrawal options. Inheritance rules can be complicated. If you inherit a retirement account, you should consult with a plan administrator or a tax professional to understand their responsibilities.
How Your RMD Amount Is Calculated
If you need to take an RMD, the IRS provides a simple formula. The agency divides the balance of your qualified retirement accounts as of December 31, 2024, by a figure known as your distribution period. The distribution period is calculated based on your life expectancy and assumes that beneficiaries will continue to make required withdrawals after your death.
The IRS Uniform Lifetime Table, found in Publication 590-B, indicates the correct distribution period. Many people use online tools, such as RMD calculators, to determine their required amount.
Consider someone who will be 74 years old by the end of 2024 with a traditional IRA balance of $250,000. If their distribution period is 25.5, they must withdraw a minimum of $9,804 as RMD. If your spouse is over 10 years younger and the sole beneficiary, or if you inherited an account from a spouse, you must follow special guidelines.
You may own multiple traditional IRAs or employer retirement plans of the same type. If so, your total required withdrawal is calculated using their combined balances. You can withdraw the entire RMD from one account or divide it among several; the important thing is that you withdraw the full amount.
What You May Want To Do With The Money From Your 2025 RMD
Regardless of whether you require the funds, you must take your RMD. Once the funds have been withdrawn, you have several options for how to use them. Each option has different tax and family planning implications.
1. Use the Money for Your Expenses
Many retirees rely on RMDs to supplement their regular income, which may include Social Security or pension payments. Simply transfer the funds to your checking or savings account and use them for daily expenses, travel, home repairs, or anything else you need.
2. Support Children or Grandchildren
Some retirees may use their RMD to help their family members. This could include giving money to adult children, setting up a 529 college savings plan for grandchildren, or purchasing life insurance to ensure financial security in the future. These strategies can be used to transfer wealth in deliberate ways.
3. Donate the Withdrawal to Charity
One popular option is a qualified charitable distribution (QCD). Individuals 70½ and older can donate directly from their IRA to qualified charities. In 2025, the limit is $108,000 for individuals and $216,000 for couples. The amount donated through a QCD counts towards your RMD. Because the funds are donated directly to the charity, they are not considered taxable income.
This is different from taking the RMD yourself and then donating the money. In that case, the withdrawal is still considered taxable income, but you can claim a charitable deduction if you itemize.
Planning for Taxes and Withholding
An RMD is taxable income (unless it is derived from a Roth account or processed through a QCD). You should estimate how much tax you may owe on your 2025 RMD. Many retirees prefer that taxes be withheld directly from their withdrawals, just as they were withheld from their paychecks while working. This can help you avoid surprises during tax season and make budgeting easier.
Source: AARP