Traditional IRAs, 401(k)s, and similar retirement accounts allow you to save money before taxes, letting your money grow for decades. But eventually, the IRS requires you to start withdrawing a portion of those savings each year. These withdrawals are called required minimum distributions, or RMDs, and the income you take out is taxed at your normal tax rate. Understanding how the 2025 RMD rules work can help you avoid penalties and plan your retirement income more effectively.
Changing RMD Ages Under SECURE 2.0
Before recent law changes, retirees had to begin taking RMDs in the year they turned 72, although the first withdrawal could be delayed until the following April. The SECURE 2.0 Act, passed in 2022, reshaped this timeline so retirees could keep money in their accounts longer. Beginning in 2023, the RMD age increased from 72 to 73. Beginning in 2033, the RMD age will rise again to 75.
This means that depending on your birth year, your RMD starting age may be different from someone just a few years older or younger. The goal of these changes is to reflect longer life expectancy and to allow retirement savings to grow for a longer period before mandatory withdrawals start.
| Year | RMD Starting Age |
| Before 2023 | 72 |
| 2023-2032 | 73 |
| 2033 and Beyond | 75 |
Pay Attention to Deadlines
Even though you generally have until December 31st each year to complete your RMD (except for your first RMD, which can be taken by April 1st of the following year), the process is not automatic. You usually must contact your financial institution, fill out forms, and wait for the distribution to be processed. Many companies set earlier internal deadlines because the end of the year brings extremely high demand.
Failing to take your RMD on time can lead to costly penalties. SECURE 2.0 reduced the traditional 50% penalty to 25%, and potentially as low as 10% if you resolve the mistake within two years. Even with this lower penalty structure, it’s still important to take withdrawals early enough to avoid last-minute complications.
Roth Accounts and RMD Rules
A major update for retirees affects Roth workplace accounts. Roth IRAs have long been exempt from lifetime RMDs, meaning owners never have to withdraw money if they prefer to leave it invested. However, Roth 401(k)s and Roth 403(b)s used to require RMDs.
Starting in 2024, all Roth accounts follow the same rule: no RMDs during the original owner’s lifetime. That means if you have a Roth workplace plan, you do not need to take an RMD from it, even if you are older than 73.
After the owner passes away, Roth accounts—like other retirement accounts—do become subject to RMD rules for heirs. The rules differ depending on whether the beneficiary is a spouse, a minor child, or another type of inheritor. Some heirs must drain the account within 10 years, while spouses may have more flexible withdrawal schedules. Because inheritance rules can be complex, anyone who inherits a retirement account should consult a plan administrator or tax professional to understand their obligations.
How Your RMD Amount Is Calculated
If you need to take an RMD, the IRS uses a simple formula. The agency divides the balance of your qualifying retirement accounts as of December 31, 2024, by a number called your distribution period. The distribution period is based on your life expectancy and assumes that beneficiaries may continue taking required withdrawals after your death.
You can find the correct distribution period in the IRS Uniform Lifetime Table, available in Publication 590-B. Many people also use online tools, such as RMD calculators, to estimate their required amount.
For example, imagine someone who is 74 at the end of 2024 and has a $250,000 balance in a traditional IRA. If their distribution period is 25.5, they would need to withdraw at least $9,804 for their RMD. Special rules apply if your spouse is more than 10 years younger and is the sole beneficiary, or if you inherited an account from a spouse.
If you have multiple traditional IRAs or multiple employer retirement plans of the same type, your total required withdrawal is based on the combined balances. You can take the whole RMD from one account or split it among several; what matters is that you withdraw the total required amount.
What You May Want To Do With The Money From Your 2025 RMD
Whether or not you need the cash, you must take your RMD. Once the money is withdrawn, you have several options for how to use it. Each choice has different tax or family-planning consequences.
1. Use the Money for Your Expenses
Many retirees rely on their RMDs as part of their regular income—sometimes as a supplement to Social Security or pension payments. You can simply transfer the funds into your checking or savings account and use them for everyday costs, travel, home repairs, or anything else you need.
2. Support Children or Grandchildren
Some retirees may use their RMD to help family members. This might mean gifting money to adult children, contributing to a 529 college savings plan for grandchildren, or purchasing life insurance intended to provide future financial support. These strategies can help transfer wealth in intentional ways.
3. Donate the Withdrawal to Charity
A popular option is the qualified charitable distribution (QCD). Individuals aged 70½ or older can donate money directly from their IRA to a qualified charity. In 2025, the limit is $108,000 per person or $216,000 per couple. The amount donated through a QCD counts toward your RMD, and because the money goes straight to the charity, it does not get added to your taxable income.
This is different from taking the RMD yourself and then donating the cash. In that scenario, the withdrawal is still taxable income, although you may claim a charitable deduction if you itemize.
Planning for Taxes and Withholding
Because an RMD counts as taxable income (unless it comes from a Roth account or goes through a QCD), it’s important to estimate how much tax you may owe for your 2025 RMD. Many retirees choose to have tax withholding taken directly from their withdrawals, similar to how taxes were withheld from paychecks during their working years. This can help prevent surprises at tax time and make budgeting simpler.
Source: AARP