When you reach age 73, the IRS requires you to start taking money out of your IRA RMDs, mandatory withdrawals from traditional retirement accounts after a certain age. Also known as required minimum distributions, these aren’t optional — skip them and you’ll pay a 50% penalty on what you should’ve taken. This rule applies to traditional IRAs, tax-deferred retirement accounts where contributions may have been tax-deductible and 401(k)s, employer-sponsored retirement plans that grow tax-deferred, but not to Roth IRAs, after-tax retirement accounts where withdrawals are tax-free in retirement. You don’t need to take RMDs from a Roth IRA while you’re alive — that’s one of its biggest perks.
How much you must withdraw? It’s not a flat number. The IRS uses your account balance at the end of last year and your life expectancy from their tables to calculate it. If you’re 73, you’ll take about 3.77% of your balance. That percentage goes up each year. If you have multiple IRAs, you add up all your balances to get the total RMD, but you can take the full amount from just one account. With 401(k)s, you usually have to take the RMD from each plan separately, unless you’re still working for the company that sponsors it.
Many people think RMDs are just a tax trap, but they’re also a signal to rethink your retirement strategy. If you don’t need the cash, you can reinvest it in a taxable account, give it to charity through a qualified charitable distribution (QCD), or use it to pay down debt. Some people even use RMDs to fund a Roth conversion — pulling money out of a traditional IRA and putting it into a Roth IRA, paying the tax now to avoid future RMDs. That’s what makes 2025 a critical year for high earners: tax rates might rise, and the backdoor Roth IRA loophole could close.
What you’ll find here are real, no-fluff guides on how to handle IRA RMDs without overpaying taxes, how to avoid common mistakes like missing deadlines or miscalculating amounts, and how to coordinate your RMDs with other accounts like 401(k)s and taxable portfolios. You’ll see how people use dividends and bond coupons to help meet RMDs without selling assets, how hybrid advisors help manage withdrawals, and why some target-date funds make RMDs harder by being too conservative. There’s no theory here — just what works when the IRS is watching.
Qualified Charitable Distributions (QCDs) let retirees over 70½ give directly from their IRA to charity - tax-free. Learn the 2025 rules, limits, eligible charities, and how QCDs reduce taxes better than itemized deductions.
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