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 minimum required distributions (MRDs), also known as required minimum distributions or RMDs. MRDs 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 MRDs by a certain date or incur a penalty; see MRD Rules for Inherited IRAs for more details.
For Roth IRAs, there are no MRDs for the original owner. If you have both kinds of IRAs, withdrawals from a Roth IRA will not help satisfy your annual MRD 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 MRD. In subsequent years, the deadline is December 31. MRDs will be required each year for the remainder of your life after 70½.
Penalties for taking less than your MRD after 70½ can be severe—up to 50% of the amount not taken.
In addition to being mindful of MRDs, you should also consider creating an overall plan for taking withdrawals that includes all of your retirement income sources.
Determining your MRD amount
Generally, the amount of your MRD 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 MRD Calculator to help determine what you'll be required to withdraw.
You can also use our Retirement Distribution Center to help manage your MRDs. Get estimated MRDs 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 MRDs are taxed
MRDs 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. MRDs may also be subject to state and local taxes. If you made nondeductible contributions to your IRA, you must calculate your MRD 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 MRDs to charity
One exception to MRDs being taxed as ordinary income occurs when MRDs 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.