Turning age 70½ is a major milestone if you own an IRA. If you have a Traditional IRA, that's when you must begin withdrawals, or required minimum distributions (RMDs), also known as minimum required distributions (MRDs). RMDs are mandatory, minimum yearly withdrawals that generally must be taken starting in the year the IRA account holder turns 70½.
If you inherit an IRA, you will generally be required to begin taking RMDs by a certain date or incur a penalty; see RMD Rules for Inherited IRAs for more details.
For Roth IRAs, there are no RMDs for the original owner. If you have both kinds of IRAs, withdrawals from a Roth IRA will not help satisfy your annual RMD requirement for your Traditional IRA.
You generally have until April 1 of the year following the calendar year you turn age 70½ to take your first RMD. In subsequent years, the deadline is December 31. RMDs will be required each year for the remainder of your life after 70½.
Penalties for taking less than your RMD after 70½ can be severe—50% of the amount not taken.
In addition to being mindful of RMDs, you should also consider creating an overall plan for taking withdrawals that includes all of your retirement income sources.
Determining your RMD amount
Generally, the amount of your RMD is determined by dividing the adjusted market value of your account as of December 31 of the prior year by an applicable life expectancy factor. You can use the Uniform Lifetime Table (PDF) to find your life expectancy factor or our RMD Calculator to help determine what you'll be required to withdraw.
You can also use our Retirement Distribution Center to help manage your RMDs. Get estimated RMDs for your Fidelity IRAs (Traditional IRAs, SEP IRAs, SIMPLE IRAs, Rollover IRAs, and all small-business retirement plans). Our system also keeps track of withdrawals and allows you to schedule automatic withdrawals on a monthly, annual, or customized basis. Learn more about our Retirement Distribution Center.
How RMDs are taxed
RMDs are taxed as ordinary income for the tax year in which they are taken and will be taxed at your applicable individual federal income tax rate. RMDs may also be subject to state and local taxes. If you made nondeductible contributions to your IRA, you must calculate your RMD based on the total balance, but your taxable income may be reduced proportionately for the after-tax contributions. Please consult a tax advisor to learn more.
Donating RMDs to charity
One exception to RMDs being taxed as ordinary income occurs when RMDs are taken as Qualified Charitable Distributions (QCDs). A QCD is a direct transfer of funds from an IRA custodian, payable to certain qualified charities, allowing a taxpayer, age 70½ or older, to exclude the amount donated from taxable income. Learn more about QCDs.