Generally, once you turn 72, you’re required to take a specific amount of money out of your individual retirement accounts (or other tax-deferred plans) every year, whether you need the money or not. Your required minimum distribution is based on the total amount of money in your tax-deferred accounts divided by a factor from IRS life-expectancy tables. The CARES Act, enacted in March 2020 in response to the coronavirus pandemic, allowed seniors to skip RMDs in 2020, but Congress is unlikely to extend that waiver this year.
Starting in 2022, the IRS will use new distribution tables to account for the fact that people are living longer—which means they need their savings to last longer, too. The new formula reflects life expectancies that are about one to two years longer than in the existing life-expectancy tables, which will reduce the size of RMDs. For example, under the current formula, a 72-year-old with $300,000 in an IRA would be required to withdraw $11,719. Under the new formula, her RMD would be $10,948, a difference of about 7%.
The last time the IRS revised the tables was in 2002. You can always take more than the required distribution—and many seniors do. But if you fail to take out the minimum, the penalty is 50% of the amount you should have withdrawn.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
-
The Most Popular Apps for Retirement Planning in 2025A J.D. Power survey ranks retirement planning apps based on customer service and satisfaction. Does your financial app make the cut?
-
Don't Disinherit Your Grandchildren: The Hidden Risks of Retirement Account Beneficiary FormsStandard retirement account beneficiary forms may not be flexible enough to ensure your money passes to family members according to your wishes. Naming a trust as the contingent beneficiary can help avoid these issues. Here's how.
-
Ask the Editor, September 12: Tax Questions on 529 Plan Rollovers to a Roth IRAAsk the Editor In this week's Ask the Editor Q&A, we answer four questions from readers on transferring 529 plan money to a Roth IRA.
-
New Bill Would End Taxes on Social Security Benefits in 2026: What Retirees Should KnowTax Law Congress could look to high earners to help offset lost revenue and possibly shore up the Social Security program.
-
Ask the Editor, August 29: Tax Questions on Estate and Gift TaxesAsk the Editor In this week's Ask the Editor Q&A, we answer questions from readers on estate and gift taxes.
-
Will You Get a ‘Surprise’ Tax Bill on Your Social Security Benefits in Retirement?Retirement Taxes Social Security benefit payments might land you in hot water when filing 2025 taxes — here are three reasons why.
-
Ask the Editor, August 8: Tax Questions on Roth IRA ConversionsAsk the Editor In this week's Ask the Editor Q&A, we answer tax questions from readers on converting a traditional IRA to a Roth IRA.
-
Ask the Editor, July 4: Tax Questions on Inherited IRAsAsk the Editor In this week's Ask the Editor Q&A, we answer tax questions from readers on the rules on inheriting IRAs.
-
Ask the Editor, June 27: Tax Questions on Disaster Losses, IRAs
Ask the Editor In this week's Ask the Editor Q&A, we answer tax questions from readers on paper checks, hurricane losses, IRAs and timeshares.
-
Ask the Editor, June 20: Questions on Tax Deductions and IRAsAsk the Editor In our latest Ask the Editor round-up, Joy Taylor, The Kiplinger Tax Letter Editor, answers four questions on deductions, tax proposals and IRAs.
