2024 RMD Reference Guide

May 14, 2024 Chris Kawashima
What's new with required minimum distributions? We cover the basics here.

If you're turning age 73 this year, it's time to start taking the annual required minimum distributions (RMDs) from your tax-deferred retirement accounts, such as traditional IRAs. The penalty for not taking your RMD can be pretty steep: The IRS will levy a penalty amounting to 25% of the sum you should have withdrawn. That said, if you correct the issue by taking your full withdrawal, the IRS may lower the penalty to 10%.

Here's what to know. 

Timing of your first RMD

In general, you must take your first RMD by April 1 of the year after you reach RMD age (though, there are some exceptions, as we'll see below). For every year after that, you'll have to take your RMDs by December 31. 

The table below covers what you should know about starts dates for different kinds of accounts.

Account type Timing of first RMD
IRAs including traditional, SEP, and SIMPLE By April 1 of the following year after reaching RMD age 
401(k), 403(b), 457(b) plans, or other qualified plan By April 1 of the following year after reaching RMD age. However, if you are still employed, you may be able to delay your first RMD until April 1 of the year after you retire. A few other caveats apply: The exemption applies only to the account for your most recent employer, the plan must allow this exemption, and you cannot own more than 5% of a business. 
Roth IRA RMDs are NOT required
Roth 401(k), 403(b), or 457(b) (designated Roth account) RMDs are NOT required
Inherited retirement accounts If the deceased has not taken their RMD, you must generally take a distribution for them by December 31 of the year of death. If the heir of the account is of RMD age, they might also be subject to their own RMDs. The RMD rules for inherited accounts are very complex.* 

Of course, just because you can delay your first distribution doesn't mean you should. Pushing your first distribution into the next calendar year would mean you'd have to take two RMDs that year—which could saddle you with more taxable income and therefore a bigger tax bill. For example, if you turn age 73 in 2024, you could wait until April 1 of 2025 to take your first RMD, but then you would also need to take your 2025 RMD by December 31.

RMD aggregation rules

Another wrinkle is that you generally must determine your RMD for each account separately. That said, in some situations you may be able to combine your RMD obligations from each account and take the full amount from a single account. The processes of combining RMDs is called aggregation.

Account type Aggregation rule
IRAs including traditional, rollover, SEP, and SIMPLE* Yes, you can aggregate with other IRA accounts
401(k) or other qualified pre-tax plan No, each account must have its own RMD
Governmental 457(b) plans** No, each account must have its own RMD
403(b) plans Yes, but only with other 403(b) accounts
Roth IRA RMD is not required
Roth 401(k), 403(b), or 457(b) (designated Roth account) RMD is not required

Calculating RMDs

You can calculate your RMD using: 

  • Your account balance as of December 31 of the prior year (do this for each account)
  • Divide that number by the "Distribution Period" associated with your birth year from IRS Publication 590-B
Age  Distribution period (DP) 
73 26.5
74 25.5
75 24.6
76 23.7
77  22.9
78 22.0
79 21.1
80 20.2
81 19.4
82  18.5
83  17.7
84 16.8
85 16.0
86 15.2
87 14.4
88 13.7
89 12.9
90 12.2
91 11.5
92 10.8
93 10.1
94 9.5
95 8.9
96 8.4
97 7.8
98 7.3
99 6.8
100 6.4

For example, if you turn 74 years old on your birthday this year and your traditional IRA balance was $500,000 at the end of last year, you would calculate your RMD as follows:

  • $500,000 account balance as of December 31
  • Divided by 25.5 Distribution Period
  • Equals $19,607.84 RMD 

Note: Don't use the table above if your spouse is the sole beneficiary of your IRA and is more than 10 years younger than you. Refer to publication 590-B for Joint Life & Last Survivor Expectancy Table. Beneficiaries of inherited IRAs generally follow a Single Life Expectancy table.

Strategies for lowering RMDs

As noted above, money you withdraw from a tax-deferred retirement account is generally taxable. And if you have a significant amount of tax-deferred savings when you hit RMD age, you could be in for a bit of a tax shock when you have to start taking withdrawals.

 You do have some options, though:

  • Qualified distributions before RMD age. In some cases, waiting as long as possible to tap your tax-deferred assets can make sense, as you'll leave them more time for potential growth. That said, if you already have a large amount of tax-deferred savings, starting withdrawals before you reach RMD age could be a tax-smart approach. Why? By lowering your balance before you reach RMD age, your RMDs may not be as large when it's finally time to start them. 
  • Roth conversion. The idea here is to convert some of your tax-deferred savings into Roth savings. You'll have to pay taxes in the year of the conversion, but by lowering your tax-deferred account balance, you could potentially have smaller RMDs and gain a tax-free resource for future use (or to leave a legacy). Roth conversions generally make the most sense for people who expect to be in a higher tax bracket when they start taking withdrawals than they are at the time they convert the assets. In other words, it's better to pay a lower tax rate on a conversion today than a higher rate on a withdrawal tomorrow. It's also worth noting that tax rates are at historically low levels compared to rates over the past few decades, so conversions can also make sense if you think rates will be higher in the future.
  • Qualified charitable distributions.QCD allows you to make tax-free donations directly from an IRA to a qualified charity, thereby satisfying all or part of your annual RMD from your IRA. For 2024, an individual can donate up to $105,000 a year to a qualified charity, indexed for inflation.
  • Net Unrealized Appreciation. This is a tax strategy for people who own company stock in a qualified employer-sponsored retirement plan and are at least 59½ or separated from their employer. Taking advantage of this strategy may save you money and reduce your potential RMDs.

Use our RMD calculator to help you estimate your RMD or visit the RMD center for more information on automating your RMDs from schwab.com.

The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.

All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness, or reliability cannot be guaranteed.

Examples provided are for illustrative purposes only and not intended to be reflective of results you can expect to achieve.

Investing involves risk, including loss of principal.

The information and content provided herein is general in nature and is for informational purposes only. It is not intended, and should not be construed, as a specific recommendation, individualized tax, legal, or investment advice. Tax laws are subject to change, either prospectively or retroactively. Where specific advice is necessary or appropriate, individuals should contact their own professional tax and investment advisors or other professionals (CPA, Financial Planner, Investment Manager) to help answer questions about specific situations or needs prior to taking any action based upon this information.

Roth IRA conversions require a 5-year holding period before earnings can be withdrawn tax free and subsequent conversions will require their own 5-year holding period. In addition, earnings distributions prior to age 59 1/2 are subject to an early withdrawal penalty.

Investing involved risks, including loss of principal.

Supporting documentation for any claims or statistical information is available upon request.