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Required minimum distributions (RMDs) are annual withdrawals the IRS generally requires from certain retirement accounts. They affect your budget in three different ways: the required gross amount, the date by which it must leave the account, and the portion that remains after income-tax withholding or other tax liability. Treating the full RMD as spendable cash can overstate your available income and leave you short for taxes or later-year withdrawals.
What an RMD is—and why it is not the same as spending money
An RMD is a minimum amount that must generally be distributed from a tax-deferred retirement account for a particular year. It is an account-withdrawal requirement, not a monthly paycheck and not a recommendation that you spend the money.
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For most traditional IRAs and many employer retirement plans, the distribution is generally included in taxable income. The gross amount is the figure that satisfies the RMD; your budget should use the net amount you expect to keep after withholding, estimated taxes, and any portion you transfer elsewhere. Amounts representing after-tax basis can be treated differently from pre-tax money, so the taxable share depends on your records and account type.
You may withdraw more than the minimum, but the excess generally does not reduce the next year’s RMD. Each year’s requirement is calculated separately. An RMD can therefore be both a cash-flow event and a tax-planning event even when you do not need the money for living expenses.
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When RMDs generally begin and when they are due
The applicable starting age
Under current federal guidance, owners generally begin RMDs for the year they turn 73. This applies to the transition group that reaches 73 before 2033. People who reach the applicable age after 2032 generally use age 75. Because the age schedule is based on birth year and can change with future legislation, confirm the rule for your own year of birth before scheduling a distribution.
First-year timing
Your first RMD is generally due by April 1 of the year after the year you reach the applicable starting age. You may instead take it during the year you reach that age. The April 1 option is a delay, not an exemption: the RMD for the following year is still due by December 31 of that same following year.
For example, if you turn 73 in 2026, you may take the 2026 RMD during 2026 or delay it until April 1, 2027. If you delay, your 2027 RMD remains due by December 31, 2027. That can put two taxable distributions into 2027.
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After the first distribution year, the general deadline is December 31 each year. Add that date to your annual cash-flow calendar rather than assuming the plan will send a monthly payment automatically. Your custodian or plan administrator may offer recurring installments, but the IRS requirement is based on the total distributed for the year.
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How to calculate an RMD
For a typical IRA, the general calculation is:
Prior December 31 account balance ÷ applicable IRS distribution period = current-year RMD
The balance is the account’s value at the end of the preceding calendar year, not its current-day value. The applicable distribution period comes from an IRS life-expectancy table. Different tables can apply depending on your age, whether your spouse is the sole beneficiary and more than 10 years younger, or whether the account is inherited.
What belongs in the calculation
- Use the account value on December 31 of the prior year, following the valuation method used by your custodian.
- Use the IRS table and distribution period that matches your owner and beneficiary circumstances.
- Calculate separate requirements for accounts and plans according to the applicable aggregation rules; do not assume an inherited account follows the original owner’s method.
- Ask the plan administrator how its plan document handles multiple contracts, rollovers, and the still-working exception.
A spreadsheet or retirement-income workbook can organize balances, factors, deadlines, and planned withdrawals, but it should not be treated as a legally correct calculator unless its tables and method are checked against current IRS guidance or your administrator’s calculation.
Illustrative arithmetic
Suppose an account’s prior December 31 value is $600,000. If the applicable IRS distribution period for the owner were 25.5, the arithmetic would be $600,000 ÷ 25.5, or about $23,529. That number is only an illustration of the formula; use the distribution period that actually applies to you.
Market gains or losses during the current year do not change that year’s already-determined RMD. They can, however, change the balance used for the next year’s calculation, so future RMDs can rise or fall.
How much of an RMD can you spend?
You can spend any portion of the distribution that remains after taxes and other obligations, but the gross RMD is not automatically your budget income. Decide in advance how much will be withheld, how much will move to a taxable investment account or cash reserve, and how much is available for expenses.
Withholding and estimated tax
Federal and, where applicable, state withholding can be taken from an IRA or plan distribution. Withholding reduces the cash you receive but does not reduce the gross amount credited as your RMD. If withholding is too low, you may need estimated payments or owe tax when filing; if it is too high, you may tie up cash until a refund. Your tax professional can evaluate the appropriate approach using all household income and deductions.
After-tax basis and mixed accounts
Traditional IRA distributions are generally taxable except for amounts attributable to after-tax basis and other specific exceptions. Basis tracking can involve Form 8606 and aggregation of traditional, SEP, and SIMPLE IRAs. Do not assume that a stated percentage of one withdrawal is tax-free without reviewing your records.
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Other income effects
An RMD can affect the taxable portion of Social Security benefits, Medicare income-related premium surcharges, and state income taxes. The effect depends on your complete income and the rules in force for your state and tax year. The RMD itself does not provide a universal answer to those questions, so model them with current official guidance or individualized advice.
A practical RMD budgeting workflow
- List every relevant account. Separate traditional IRAs, employer plans, Roth accounts, and inherited accounts. Record the owner, beneficiary status, custodian, and whether you are still working.
- Record prior year-end balances. Enter each December 31 balance and retain the statement supporting it.
- Confirm the applicable rule. Verify your required beginning date, IRS table, aggregation treatment, and any plan-specific provision with the administrator or current IRS publications.
- Set the annual deadline. Mark April 1 for a delayed first RMD, or December 31 for a first-year distribution taken during the year and for all later-year RMDs.
- Choose a distribution schedule. You can take a lump sum or installments. If using installments, make sure their total reaches the annual minimum before the deadline.
- Estimate the net cash. Subtract planned withholding and any tax reserve from the gross amount before assigning money to monthly spending.
- Coordinate other income. Add pensions, Social Security, wages, annuities, interest, and planned portfolio withdrawals to the same calendar.
- Reconcile at year-end. Confirm the custodian’s year-to-date distributions and obtain written confirmation that the RMD was satisfied.
Should you take the first RMD at 73 or defer it to April 1?
Both timing choices are generally permitted. The better choice depends on cash needs, withholding, and how concentrating income in one calendar year affects your household.
| Consideration | Take the first RMD in the age-73 year | Delay until April 1 of the next year |
|---|---|---|
| Calendar-year income | Usually one first-year RMD in that year. | Potentially two RMDs in the following calendar year because the second-year amount is still due by December 31. |
| Cash for current spending | Provides the required cash earlier if you need it. | Leaves the account invested longer, but provides no first-year cash until the delayed withdrawal. |
| Tax withholding | Withholding can be spread across the year or taken from the distribution. | Withholding and estimated-tax needs may be concentrated when both distributions occur in one year. |
| Deadline risk | You still must meet the December 31 deadline for the next year’s RMD. | You must track both the April 1 first distribution and the December 31 second distribution. |
Do not assume deferral will place you in a lower tax bracket or produce a better Medicare result. Those outcomes require a calculation using your actual income, deductions, filing status, and applicable thresholds.
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Account type changes the rule
| Account situation | General RMD treatment | Budget and tax point |
|---|---|---|
| Traditional IRA owned by a living individual | RMDs generally begin at the applicable age; the first may generally be delayed until April 1 of the following year. | Distributions are generally taxable except for eligible after-tax basis and other exceptions. |
| Employer defined-contribution plan | Plan terms and a still-working exception may affect the required beginning date. The exception is not universal. | Confirm whether you own more than 5% of the employer and what the plan document permits. |
| Roth IRA or designated Roth plan account owned by a living participant | Living owners generally do not take RMDs from these accounts under current rules. | Do not apply a traditional-IRA withdrawal schedule automatically; employer-plan administration can still matter. |
| Inherited IRA or plan account | Distinct beneficiary rules, deadlines, and distribution methods apply. | Identify whether you are a spouse, eligible designated beneficiary, other designated beneficiary, or non-designated beneficiary before calculating anything. |
A beneficiary should not use the original owner’s age or deadline without checking the inherited-account provisions that apply to the inheritance date and beneficiary category.
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Can a qualified charitable distribution count toward an RMD?
An eligible qualified charitable distribution (QCD) made directly from an IRA to a qualifying charity may count toward your RMD and may be excluded from income when all requirements are met. The payment generally must go directly from the IRA trustee or custodian to the charity; a distribution paid to you first is not treated the same way.
The Congressional Research Service reported a QCD maximum of $111,000 for 2026 in its report updated January 15, 2026. That is a year-specific indexed amount, not a permanent limit. Check the current IRS rules, eligible-recipient requirements, age conditions, and documentation before relying on it. Use IRS Publication 590-B for the underlying eligibility and tax treatment.
For budgeting, subtract the QCD from the cash you expect to receive, while still counting the eligible amount toward the year’s RMD. Keep the charity acknowledgment and custodian records with your tax documents.
What happens if you miss an RMD?
The IRS says an excise tax may apply to an RMD shortfall. The general rate is 25%, reduced to 10% if the shortfall is corrected within two years, subject to the rules and possible waiver procedures in effect for the year. Correct the missed amount promptly, retain evidence of the correction, and review the current Form 5329 instructions or obtain tax advice before filing.
Taking more than the required amount does not generally create a credit for the next year. If you discover an error, compare the amount actually distributed with the amount required for that specific year and contact the custodian rather than simply increasing a later withdrawal.
How to organize an RMD planning worksheet
An optional retirement budget planner or RMD planning worksheet can make the annual process easier to audit. Useful columns include:
- Account name, type, owner, beneficiary category, and custodian
- Prior December 31 balance and the statement date
- Applicable IRS table and distribution period
- Calculated gross RMD and the source of the calculation
- Chosen payment dates and year-to-date distributions
- Federal and state withholding estimates
- QCD amount, charity, and transfer confirmation when applicable
- Net cash assigned to monthly spending, reserves, or reinvestment
- Next deadline and confirmation that the administrator processed the distribution
Review the worksheet whenever IRS tables, indexed limits, tax law, or your beneficiary and employment status changes. It is an organizer, not a substitute for current IRS guidance or individualized tax advice.
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