RMD Deadline: Take Your Withdrawal by December 31
The rule, the penalty, and a five step way to take your withdrawal on time.
This article is educational information only, not personalized financial advice. Nusafa and its authors are not licensed financial advisors, and nothing here should be read as a recommendation to buy, sell, or hold any specific investment. Read our full disclosure policy.
If you are 73 or older and hold a traditional IRA or a 401(k), you generally must withdraw a minimum amount each year. This is called a required minimum distribution, or RMD. For most people the deadline is December 31. Missing it can trigger a tax penalty.
Key takeaways
- Most people past their first RMD year must finish by December 31.
- The penalty is 25% of the amount you should have taken, or 10% if you fix it in time.
- Ask your account company to calculate it, then confirm the number.
Who has to take an RMD?
- Age. The IRS says RMDs generally start at 73. Under current law the age rises to 75 for people born in 1960 or later.
- Accounts. Traditional IRAs, SEP and SIMPLE IRAs, and employer plans such as a 401(k) or 403(b).
- Not Roth IRAs. Roth IRAs and designated Roth accounts have no RMD while the owner is alive.
- Still working? Some people can delay a current employer plan RMD until they retire. Ask your plan.
When is it due?
- Your first RMD: due for the year you turn 73, but you may delay it to April 1 of the next year.
- Every year after: due by December 31.
- The catch: if you delay your first one, you take two in one calendar year. That can raise your tax bill for that year. Ask a tax professional which timing suits you.
How is the amount worked out?
The basic formula is your account balance on December 31 of the last year, divided by a life expectancy factor from an IRS table. Example: a $300,000 balance and a factor of 26.5 gives about $11,321. Your account company usually runs the numbers, and the IRS publishes the tables on its RMD page. Inherited accounts and some spouse cases use different rules.
What if I miss it?
The IRS says the shortfall may face an excise tax of 25%. If you correct it within two years, the rate can drop to 10%. If you missed one, ask a tax professional about the correction form.
How to take it on time
- List every account. IRAs and 401(k)s each have their own calculation.
- Ask each company for your RMD amount, and compare it to the formula.
- Choose how to receive it. Cash to your bank is common, and you can usually have taxes withheld. An RMD cannot be rolled into another IRA.
- Request it by early December. Processing can take days, and year end is busy.
- Keep the confirmation. It supports your tax return.
- Set the next one. Add a yearly reminder for October.
Mistakes that trigger the penalty
- Using the wrong balance. The formula uses the prior December 31 balance, not today's.
- Forgetting an old 401(k). Each employer plan is calculated on its own.
- Assuming one withdrawal covers everything. IRAs can be combined into one withdrawal. Employer plans cannot be mixed in.
- Waiting until the last week. Requests can take days to process.
- Skipping the confirmation. Keep proof of the date and the amount.
Quick action checklist
- [ ] Confirm your age and which accounts require an RMD.
- [ ] Request the amount from each account company.
- [ ] Choose where the money goes, and decide on tax withholding.
- [ ] Place the withdrawal request before mid December.
- [ ] Add a yearly Nusafa reminder. See the year end money review for other dates.
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This is general education, not personalized financial advice.
