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Making sense of RMDs

Once you reach age 731 you're required to withdraw a certain amount of money from your retirement plans, such as IRAs, 401(k)s, and 403(b)s each year. That amount is called a required minimum distribution (RMD). Here are some answers to frequently asked questions to help you get started:

What's a required minimum distribution (RMD)?

A required minimum distribution (RMD) is a yearly mandatory withdrawal from tax-deferred retirement accounts that starts when the account owner reaches the age of 73.

What's the deadline for taking a required minimum distribution?

After reaching age 73, the deadline for taking a required minimum distribution (RMD) is December 31 each year. However, if this is your first RMD you have the option to delay it until April 1 of the year following the year you reach age 73.

If a required minimum distribution (RMD) is not taken by the annual deadline, it could result in an IRS penalty equal to 25% of the amount not taken on time.

Do I have to take my required minimum distribution if I am still working?

If you continue working past age 73, you have to take a required minimum distribution (RMD) from your IRA. However, you may qualify for an exception from taking RMDs from your current workplace saving plan, such as a 401(k), 403(b), or small-business account, if:

  • You're still working
  • You do NOT own more than 5% of the business you work for
  • You have an employer-sponsored retirement account with the business you work for

Unless your plan requires you start required minimum distributions (RMDs) by age 73, you may delay taking an RMD from the account until April 1 of the year after you retire if you meet all the criteria above. Keep in mind that this does not apply to IRAs or other accounts you may hold with companies you no longer work for.

What should I consider before taking my required minimum distribution (RMD)?

Be prepared. Plan where your required minimum distribution (RMD) will go. If you are interested in continuing to grow and protect your money, reinvesting your RMD in a Fidelity taxable account may be a good option. Will you need the money for everyday and other expenses? If so, you may consider transferring your RMD to a Fidelity cash management account. If you don’t have an existing Fidelity taxable account or cash management account, you may decide to establish one or the other prior to making the required minimum distribution (RMD) from your retirement account.

How do I calculate my required minimum distribution (RMD) from an IRA?

Your RMD is generally determined by dividing your tax-deferred retirement account balance as of December 31 of the preceding year by a life expectancy factor. Your life expectancy factor corresponds with your age in the IRS Uniform Lifetime Table (PDF).

However, if your spouse is your sole beneficiary and is more than 10 years younger than you, you can use the IRS Joint Life and Last Survivor Expectancy Table (PDF).

You can also calculate your own RMD by using our RMD Calculator.

What types of retirement accounts have required minimum distributions (RMDs)?

After reaching age 73, required minimum distributions (RMDs) must be taken from these types of tax-deferred retirement accounts:

  • Traditional, rollover, SIMPLE, and SEP IRAs
  • Most 401(k) and 403(b) plans, including Roth 401(k)s2 (only for inheritors, not the original account owner)
  • Most small-business accounts (self-employed 401(k), profit sharing plan, money purchase plan)

Can I withdraw my total required minimum distribution from one of my retirement accounts?

If you have multiple retirement accounts it's possible to take your required minimum distributon (RMD) from one, but it depends on the type of retirement account:

  • For IRAs (Traditional, rollover, SIMPLE, and SEP): You must calculate the RMD for each of these accounts separately, but you can withdraw the total RMD amount from one or any combination of accounts.
  • For 403(b)s: RMDs must be calculated separately for each account, but the total amount of the RMD can be withdrawn from any one or a combination of your 403(b) accounts.
  • For 401(k)s: RMDs must be calculated separately for each account and taken individually from those accounts.

Any distribution from an account that requires an RMD will count toward that year's RMD. Amounts withdrawn in excess of that RMD amount do NOT reduce RMD amounts in future years.

You are not required to take RMDs from your own Roth IRA and cannot satisfy an RMD requirement with a withdrawal from a Roth IRA.

How do I take a required minimum distribution (RMD) from a Fidelity IRA?

You have several options for taking an RMD from a Fidelity IRA.

Follow these steps to take a required minimum distribution (RMD) from a Fidelity IRA:

  1. Visit Accounts & Trade and select Transfer.
  2. Select Deposit, withdraw, or transfer money.
  3. Select the account from which you'd like to withdraw.
  4. Select where you'd like to direct your withdrawal, how much you'd like to withdraw, and what percent of taxes you'd like withheld.
  5. Review your information and submit your transfer.
  6. Track your RMD in the Activity & Orders tab in your Portfolio.

Please note, for 401(K) and 403(b) plans, you need to engage with your plan's recordkeeper.

How do I set up an automatic required minimum distribution (RMD) from a Fidelity IRA?

It only takes a few minutes to set up automatic withdrawals for your required minimum distribution (RMD). To get started, visit automatic withdrawalsLog In Required and select the year for your automatic RMD withdrawals to begin.

Do I have to take a required minimum distribution if I inherited an IRA?

When you inherit an IRA, many of the IRS rules for required minimum distributions still apply. However, there may be additional rules based on your relationship to the original owner. Learn more about the RMD rules for inherited IRAs that apply to you.

How are required minimum distributions (RMDs) taxed?

When taking a required minimum distribution (RMD), the money is taxed as ordinary income and as a result it may be subject to both federal and state taxes.

Can I lower my taxable income when taking my required minimum distribution (RMD)?

While RMDs are taxed as ordinary income, there are ways to lower your taxable income. For example, you may want to consider donating your required minimum distribution (RMD) to charity. A qualified charitable distribution (QCD) is a direct transfer of money from your IRA that's payable to an eligible 501(c)(3) charitable organization, which can also satisfy your RMD.3

Building a thoughtful retirement income plan can help you use RMDs in the most effective way, and help you reach your important financial goals. At the very least, it's important to spend some time understanding RMDs and your options with a financial and tax professional.

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Fidelity does not provide legal or tax advice, and the information provided is general in nature and should not be considered legal or tax advice. Consult an attorney, tax professional, or other advisor regarding your specific legal or tax situation.

The change in the RMDs age requirement from 72 to 73 applies only to individuals who turn 72 on or after January 1, 2023. After you reach age 73, the IRS generally requires you to withdraw an RMD annually from your tax-advantaged retirement accounts (excluding Roth IRAs, and Roth accounts in employer retirement plan accounts starting in 2024). Please speak with your tax advisor regarding the impact of this change on future RMDs.

This information is for educational purposes only. 1. Recently enacted legislation made a number of changes to the rules regarding defined contribution, defined benefit, and/or individual retirement plans and 529 plans. Information herein may refer to or be based on certain rules in effect prior to this legislation and current rules may differ. As always, before making any decisions about your retirement planning or withdrawals, you should consult with your personal tax advisor. 2. SECURE 2.0 Section 325 will eliminate RMDs for the original account owner for taxable years starting in 2024. 3. Secure 2.0 - Section 307 will permit, under certain limitations, a one-time election for a distribution to a charitable remainder annuity trust, charitable remainder unitrust, or a charitable gift annuity.

Keep in mind that investing involves risk. The value of your investment will fluctuate over time, and you may gain or lose money.

The tax and retirement planning information contained herein is general in nature and should not be considered legal or tax advice. Fidelity does not provide legal or tax advice. This information is provided for general educational purposes only and you should bear in mind that laws of a particular state and your particular situation may affect this information. You should consult your attorney or tax advisor regarding your specific legal or tax situation. If you transfer, recharacterize, or convert any assets into or out of your retirement accounts, you'll also need to contact Fidelity to have us recalculate your RMD based on that information.

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