A smiling couple by a bridge.

Taxation of required minimum distributions

Every good thing must come to an end … even tax deferral.
6 minute read

Points to know

  • Once you hit age 73*, the IRS requires you to start withdrawing from—and paying taxes on—most types of tax-advantaged retirement accounts.
  • You may also be required to take RMDs from retirement accounts you inherit. In most cases, RMDs are treated as ordinary income for tax purposes.

What's a required minimum distribution?

The IRS allows you to deduct contributions to and defer taxes in certain kinds of accounts—employer-sponsored accounts and traditional IRAs—in an effort to encourage people to save for retirement.

But you can't continue deferring these taxes forever. When you reach age 73 (age 70½ if you attained age 70½ before 2020), you'll be required to withdraw at least a certain amount (called your "required minimum distribution," or RMD) from your accounts every year and pay income taxes on these withdrawals.

Anyone who inherits an IRA may also be required to take RMDs. In general, nonspouse beneficiaries that inherit an IRA from someone that passed away in 2020 or later may be required to withdraw the entire account balance within 10 years. Spousal beneficiaries and certain eligible nonspouse beneficiaries may be permitted to take RMDs over their life expectancy.

Review RMD rules for inherited IRAs


Roth IRAs aren't subject to RMD rules (unless the Roth IRA was inherited). This means that although you had to pay taxes on your contributions when you made them, any earnings will be tax-free for as long as you live (if you meet the requirements when you withdraw them).

What's the deadline—and what if I miss it?

For most people, the annual deadline for taking an RMD is December 31. But if it's your first RMD, you can wait until April 1 of the year following the year you reach age 73*.

Just keep in mind that deferring your first RMD means you'll have to take 2 RMDs that year (the first by April 1 and the second by December 31).

If you don't take your RMD by the deadline or if you take less than you're supposed to, you could be subject to an IRS penalty on the shortfall.

How is my RMD calculated?

Your RMD is determined by dividing your prior year-end retirement account balance by your life expectancy factor (published by the IRS).

Many companies, including Vanguard, will calculate your RMD for you. You can also use our tool to estimate your RMD.

Sign up for our RMD Service

If you have multiple accounts

You'll have to calculate your RMD for each IRA and employer-sponsored plan separately.

When you take RMDs from your IRAs, you can withdraw them from any account you choose.

For example, if you have 2 IRAs and 1 has an RMD of $1,000 while the other has an RMD of $2,000, you can take the entire $3,000 from 1 of your IRAs or you can take a certain amount from each—it's up to you.

Employer plans work differently. You have to take each RMD amount from the specific account it was calculated for.

How are RMDs taxed?

If all your IRA contributions were tax-deductible when you made them, the full amount of the RMD will be treated as ordinary income for the year in which you take it.

If you also made nondeductible contributions to your IRAs, some of the amount won't be subject to income taxes. You can use IRS Form 8606 to calculate and report the amount that's not taxable.

Can I donate my RMD to charity and avoid the taxes?

Yes. A qualified charitable distribution (QCD) is not subject to ordinary federal income taxes – the amount is simply excluded from your taxable income. In general, QCDs must be reduced by deductible IRA contributions made for the year you reach age 70½ or later. If you've made deductible IRA contributions for the year you turn 70½ or later, consult a qualified tax advisor prior to taking a QCD to determine the amount by which your QCD must be reduced.

Making QCDs can be a great strategy for anyone who's charitably minded and doesn't need his or her full RMD. In many cases, it's more advantageous than taking the withdrawal and then donating it, because cash donations have deductibility limits.

Saving for retirement or college?

Take advantage of tax breaks just for you! See guidance that can help you make a plan, solidify your strategy, and choose your investments.

Already know what you want?

From mutual funds and ETFs to stocks and bonds, find all the investments you're looking for, all in one place.

Get more from Vanguard. Call 1-844-797-7148 to speak with an investment professional.

Read more

Offsetting gains through tax-loss harvesting
Even in the storm clouds of investment losses, there's a silver lining.

*Due to changes to federal law that took effect on January 1, 2023, the age at which you must begin taking RMDs differs depending on when you were born. If you reached age 72 on or before December 31, 2022, you were already required to take your RMD and must continue satisfying that requirement.  However, if you had not yet reached age 72 by December 31, 2022, you must take your first RMD from your traditional IRA by April 1 of the year after you reached age 73.

All investing is subject to risk, including the possible loss of the money you invest.

Vanguard's advice services are provided by Vanguard Advisers, Inc. ("VAI"), a registered investment advisor, or by Vanguard National Trust Company ("VNTC"), a federally chartered, limited-purpose trust company.

The services provided to clients will vary based upon the service selected, including management, fees, eligibility, and access to an advisor. Find VAI's Form CRS and each program's advisory brochure here for an overview.

VAI and VNTC are subsidiaries of The Vanguard Group, Inc., and affiliates of Vanguard Marketing Corporation. Neither VAI, VNTC, nor its affiliates guarantee profits or protection from losses.