Required Minimum Distributions (RMDs) are mandatory withdrawals from tax-deferred retirement accounts, such as Traditional IRAs and 401(k)s. But at what age do RMDs stop? The answer depends on the type of retirement account you have. While RMDs are generally required for life, there are exceptions and nuances that can impact when withdrawals end. Let’s break it down.
RMDs for Traditional IRAs and 401(k)s
RMDs are required from tax-deferred retirement accounts once you reach the age of 73 (starting in 2023 due to recent changes in tax law). These distributions are calculated based on your account balance and IRS life expectancy tables, and they must be taken annually by December 31st of each year.
Once you begin taking RMDs at age 73, you are required to continue withdrawing the mandated amount every year for the rest of your life, as long as the account is not fully depleted. If there are funds left in your account, RMDs will continue each year until the account is exhausted.
Roth IRAs and RMDs
Roth IRAs, however, are treated differently when it comes to RMDs. While Roth IRAs are subject to RMDs for beneficiaries (inherited Roth IRAs), the original account holder does not have to take RMDs during their lifetime. This is one of the key advantages of a Roth IRA, as it allows the funds to grow tax-deferred for a longer period. You can leave your Roth IRA untouched for as long as you like, and there’s no requirement to begin taking withdrawals at age 73.
RMDs for Depleted Accounts
RMDs continue as long as there is a balance in the account. If your account balance becomes depleted due to withdrawals or market changes, you will no longer be required to take RMDs. However, it’s important to note that the IRS requires the full RMD amount to be taken each year, so failing to do so—even if your balance is low—can result in significant penalties.
The Bottom Line
RMDs do not stop at a specific age, but they are required annually after you turn 73, as long as there are funds in the account. The key exception is Roth IRAs, which do not require RMDs during the account holder’s lifetime. However, once the account holder passes away, the beneficiary will be required to take RMDs from an inherited Roth IRA.
It’s important to plan ahead for your RMDs to ensure you meet all requirements and avoid penalties. Consulting a financial advisor or tax professional can help ensure that you are taking the correct amounts and making the most of your retirement savings.
