Required Minimum Distributions

Required Minimum Distributions2025 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

Required Minimum Distributions

  1. Mark your calendar: If turning 73 in 2025, choose whether to take your first RMD by Dec 31, 2025 or Apr 1, 2026.
  2. Use IRS life tables to calculate your annual distribution accurately.
  3. Consider Roth conversions, QLACs, and QCDs to manage RMD size and reduce taxable income.
  4. Avoid penalties: Take your RMD on time or correct within two years if missed.
  5. 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.

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