Traditional IRAs, 401(k)s, and other retirement accounts enable you to save money tax-deferred. But, eventually, the IRS requires you to begin withdrawing a portion of your savings each year. These withdrawals are known as required minimum distributions, or RMDs, and the amount you take out is taxed at your regular tax rate. Understanding the 2025 RMD rules can help you avoid penalties and better plan your retirement income.
Changing RMD Ages Under SECURE 2.0
Prior to recent law changes, retirees were required to begin taking RMDs in the year they turned 72, though the first withdrawal could be delayed until the following April. The SECURE 2.0 Act, passed in 2022, altered this timeline to allow retirees to keep their money in their accounts for a longer period of time. Starting in 2023, the RMD age increased from 72 to 73. Beginning in 2033, the RMD age will rise to 75.
Your RMD starting age may differ depending on your birth year, even compared to someone who is only a few years younger or older. These changes are intended to reflect longer life expectancy and allow retirement savings to grow for a longer period before mandatory withdrawals begin.
| Year | RMD Starting Age |
| Before 2023 | 72 |
| 2023-2032 | 73 |
| 2033 and Beyond | 75 |
Pay Attention to Deadlines
Even though you have until December 31st of each year to complete your RMD (with the exception of your first RMD, which can be taken by April 1st of the following year), the process is not automatic. You usually have to contact your financial institution, fill out forms, and wait for the distribution to be processed. Many businesses set earlier internal deadlines because the end of the year generates extremely high demand.
Failure to take your RMD on time can result in costly penalties. SECURE 2.0 reduced the traditional 50% penalty to 25%. Possibly as low as 10% if the mistake is corrected within two years. Even with the lower penalty structure, it is still critical to withdraw funds early enough to avoid last-minute complications.
Roth Accounts and RMD Rules
A significant update for retirees affects Roth workplace accounts. Roth IRAs have long been exempt from lifetime RMDs, which means that owners are never required to withdraw money if they prefer to keep it invested. RMDs were previously required for Roth 401(k) and Roth 403(b) accounts.
Beginning in 2024, all Roth accounts will follow the same rule: no RMDs during the original owner’s lifetime. That means that if you are over the age of 73 and have a Roth workplace plan, you are not required to take any RMDs.
After the owner dies, Roth accounts, like other retirement accounts, are subject to RMD rules for heirs. The rules vary according to whether the beneficiary is a spouse, a minor child, or another type of inheritor. Some heirs must deplete the account within ten years, whereas spouses may have more flexible withdrawal schedules. Because inheritance rules can be complex, anyone who inherits a retirement account should speak with a plan administrator or a tax professional to better understand their responsibilities.
How Your RMD Amount Is Calculated
If you need to take an RMD, the IRS has a simple formula. The agency divides the balance of your qualified retirement accounts as of December 31, 2024, by a number known as your distribution period. The distribution period is based on your life expectancy and assumes that beneficiaries will continue to make required withdrawals after you die.
The IRS Uniform Lifetime Table, which can be found in Publication 590-B, shows the correct distribution period. Many people use online tools, such as RMD calculators, to calculate their required amount.
Consider someone who will be 74 years old at the end of 2024 and has a traditional IRA balance of $250,000. Let’s say their distribution period is 25.5, they must withdraw at least $9,804 as their RMD. If your spouse is over 10 years younger and the sole beneficiary, or if you inherited an account from a spouse, you must follow special rules.
Do you have multiple traditional IRAs or employer retirement plans of the same type? If so, your total required withdrawal will be calculated based on their combined balances. You can withdraw the entire RMD from one account or divide it among several; what matters is that you withdraw the full amount.
What You May Want To Do With The Money From Your 2025 RMD
Regardless of whether you need the money, you must take your RMD. Once the money has been withdrawn, you have several options for how to spend it. Each option has different tax or family-planning implications.
1. Use the Money for Your Expenses
Many retirees rely on RMDs as part of their regular income, sometimes supplementing Social Security or pension payments. You can simply transfer the funds to your checking or savings account and use them for daily expenses, travel, home repairs, or whatever else you require.
2. Support Children or Grandchildren
Some retirees may use their RMD to support family members. This could include giving money to adult children, contributing to a 529 college savings plan for grandchildren, or purchasing life insurance to provide future financial security. These strategies can help to transfer wealth in deliberate ways.
3. Donate the Withdrawal to Charity
A popular choice is a qualified charitable distribution (QCD). Individuals aged 70½ or older can donate directly from their IRA to qualified charities. In 2025, the limit is $108,000 per individual or $216,000 per couple. The amount donated through a QCD counts toward your RMD, and because the funds go directly to the charity, they are not added to your taxable income.
This differs from taking the RMD yourself and then donating the money. In that case, the withdrawal is still taxable income, but you can claim a charitable deduction if you itemize.
Planning for Taxes and Withholding
An RMD is considered taxable income (unless it comes from a Roth account or is processed through a QCD). So, you should estimate how much tax you may owe for your 2025 RMD. Many retirees prefer to have taxes withheld directly from their withdrawals, just as taxes were withheld from their paychecks during their working years. This can help you avoid surprises at tax time and make budgeting easier.
Source: AARP