2025 Required Minimum Distribution (RMD) Updates
RMD Starting Age Shifted to 73
- Thanks to the SECURE 2.0 Act, starting in 2023, the age when RMDs must begin rose from 72 to 73.
- Starting 2033, the age increases again to 75 for those turning 74 or later.
For 2025:
- If you turn 73 this year, your first RMD is due by April 1, 2026.
- Subsequent RMDs are due every December 31.
First-Year RMD Timing: Watch Out for Double-Withdrawal Years
- You can choose to take your first RMD by December 31 of the year you turn 73, instead of waiting until April 1 of the following year.
- Doing this can help avoid having two RMDs in the same year, which could push you into a higher tax bracket.
Penalties and Relief
- Failing to take enough—or any—RMD triggers a 25% excise tax on the shortfall.
- If corrected within two years, that penalty drops to 10%.
- IRS rulings clarify that “reasonable errors” may be excused with proper documentation.
Roth 401(k)s Exempt
- Roth IRAs have long been exempt from RMDs.
- Under SECURE 2.0, Roth 401(k)s/403(b)s are now also exempt from RMDs during the account owner’s lifetime.
New QLAC Rules
- Qualifying Longevity Annuity Contracts (QLACs) are now allowed up to $200,000 (indexed annually) inside IRAs or plans—without being counted in your RMDs.
Inherited Accounts: The 10-Year Rule Clarified
- Effective January 1, 2025, if the original owner was already taking RMDs, non-spouse beneficiaries must continue annual RMDs over ten years.
- Other beneficiaries can wait and take distributions at any point within the 10-year window.
- Spouses and other eligible designated beneficiaries may use a different schedule.
RMD Amounts Use IRS Life Tables
- Annual RMD amounts are calculated using IRS life expectancy tables. The Uniform Lifetime Table applies for most retirees turning 73 or older.
Planning Considerations
- Delay Roth conversions or QLAC purchases until early in retirement to manage future RMD amounts.
- If you have multiple IRAs, you can sum the balances but must withdraw from each employer plan separately unless they allow aggregation.
- Still employed at 73? You may be able to delay RMDs from your employer plan—if it’s allowed under your plan rules.
Action Checklist for 2025 RMDs
- Mark your calendar: If turning 73 in 2025, choose whether to take your first RMD by Dec 31, 2025 or Apr 1, 2026.
- Use IRS life tables to calculate your annual distribution accurately.
- Consider Roth conversions, QLACs, and QCDs to manage RMD size and reduce taxable income.
- Avoid penalties: Take your RMD on time or correct within two years if missed.
- Review inherited IRAs: Understand RMD timing and beneficiary rules.
By understanding these 2025 updates, you can avoid costly penalties, reduce taxes, and integrate RMDs into a smarter retirement income strategy. Need help planning? Safe Money Independent Licensed Financial Professionals can help you calculate your RMD and build a tax-efficient withdrawal strategy.
Need help with creating an income management strategy for your retirement years? SafeMoney.com can help you. Use our Find a Financial Professional section to connect directly with an independent financial professional, and to request a personal strategy session. Should you have any questions or concerns, call 877.476.9723.