Required minimum distributions (RMDs)

You don’t have to take RMDs from a Roth IRA if you’re the original account owner. However if you have inherited a Roth IRA, you are subject to RMD Rules.

Withdrawing from a Roth IRA will not count toward meeting the RMD for IRAs or retirement accounts that do have a requirement to withdraw.

You always have the option to convert your Traditional IRA into a Roth IRA. However, if you’re age 73 or older, you will have to take your RMD for the year before you convert. Remember, a Roth conversion is a taxable event. We encourage you to speak to a tax advisor about how a conversion could impact the taxes you owe.

Yes, even if you continue working past age 73, you have to take an RMD from your IRA.

However, if you are still working, and you do NOT own more than 5% of the business you work for, you may qualify for an exception from taking RMDs from your current employer-sponsored retirement account, such as a 401(k), 403(b), or small business account until you retire.

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).

The IRS taxes RMDs as ordinary income. This means that withdrawals will count towards your total taxable income for the year. Keep in mind that this income increase may push you into a higher tax bracket and may impact the taxes you pay for your Social Security or Medicare.

If you’d like to reduce the effect of RMDs on your taxes, consider making a qualified charitable distribution (QCD). A QCD excludes the amount you donate from taxable income and can be counted toward satisfying your RMD for the year, as long as certain rules are met.

It’s important to withdraw your RMD by the appropriate deadline because the IRS penalty for missed RMD amounts is 25%.

For example, say you’re 74 years old and your RMD for calendar year 2023 was $10,000, but you only withdrew $5,000 by December 31. The 25% penalty would apply to the remaining $5,000 you did not take on time. This means that you may owe the IRS $1,250 for not taking your RMD by the deadline.

If you miss an RMD, you can ask the IRS for a waiver of the penalty. You can find information the penalty and how to request a waiver in the instructions for IRS Form 5329 (PDF). A tax advisor can also help you through the waiver process.

If you have multiple IRAs, you have the option to take all your RMDs from a single IRA. You may also choose to withdraw RMDs from multiple 403(b) accounts from a single 403(b). If you have multiple 401(k) accounts, you must withdraw your RMD separately for each 401(k).  

• For traditional IRAs, rollover IRAs, SEP IRAs, SARSEP IRAs, and SIMPLE IRAs: 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 these IRA types.
• The same RMD withdrawal methodology can be applied to 403(b)s. 403(b) RMDs cannot be aggregated with non-403(b) RMDs.
• For 401(k) and or Fidelity Retirement Plan accounts: RMDs must be calculated separately for each account and the calculated amount must be taken from its respective account.

The IRS does not allow you to convert your RMD to a Roth IRA. However, after you have withdrawn your RMD for the year from your IRA, you can convert all or part of the remaining balance to a Roth IRA at any time. Our Roth Conversion Calculator can help you decide if a Roth conversion is right for you. Remember a Roth conversion is a taxable event. We encourage you to speak to a tax advisor about how a conversion could impact the taxes you owe.