At what age do I have to start taking RMDs from my retirement accounts in 2025?

Under SECURE Act 2.0, the age for Required Minimum Distributions (RMDs) has increased. The age depends on your birth year.

RMD starting ages:

• Born 1950 or earlier: RMDs started at age 72 (already in effect)
• Born 1951-1959: RMDs begin at age 73
• Born 1960 or later: RMDs begin at age 75 (starting in 2033)

How RMDs work: Your first RMD must be taken by April 1 of the year after you reach the applicable age. All subsequent RMDs must be taken by December 31 each year. If you delay your first RMD to April 1, you will have two RMDs in the same tax year (which could push you into a higher bracket).

Calculating your RMD: Divide your account balance as of December 31 of the prior year by your life expectancy factor from the IRS Uniform Lifetime Table (Table III in Publication 590-B). For a 73-year-old, the factor is 26.5. So a $500,000 account would have an RMD of approximately $18,868.

Accounts subject to RMDs: Traditional IRAs, SEP IRAs, SIMPLE IRAs, 401(k)s, 403(b)s, and other employer-sponsored plans. Roth IRAs are NOT subject to RMDs during the owner's lifetime (a major advantage over traditional IRAs). However, Roth 401(k)s were previously subject to RMDs, but starting in 2024, Roth 401(k)s are also exempt from RMDs (SECURE Act 2.0).

Still working exception: If you are still employed and participating in your current employer's 401(k), you can delay RMDs from that plan until you retire (unless you own more than 5% of the company). This does not apply to IRAs or former employer plans.

Penalty for missing an RMD: The penalty was reduced from 50% to 25% of the missed amount under SECURE Act 2.0, and further reduced to 10% if corrected within 2 years.