RMDs: Required Minimum Distributions

Getting the most from your RMD.

 

  What's an RMD?

 

Generally, starting when you’re 72, you’re required to take mandatory withdrawals from your Traditional IRA, Rollover, SEP, or SIMPLE IRA. This annual withdrawal is known as a required minimum distribution (RMD). Roth IRAs are an exception to RMD rules. They do not require withdrawals until after the death of the owner.

Key RMD Deadlines

  • If you turn 72 after June 30, 2021 and before January 1, 2022, you have until April 1, 2022 to take your first RMD.

  • If you turned age 72 before July 1, 2021, you have until December 31, 2021 to take your next RMD.

  • If you inherit an IRA, RMD rules apply.

  • Non-IRA retirement plans, such as 401(k) or 403(b) plans, may have different deadlines. Please speak with your plan administrator for details.

  Consider the tax implications.

Generally, your RMDs are taxed as regular income within the year they are taken. RMDs can also be subject to state and local taxes. Please consult a tax professional for more detailed information.

What you do with your RMD is your choice.

 

Before you take your RMD, here are four questions to consider:

How much is my distribution?

Your RMD changes each year, based on your balance and age. Use our RMD calculator to discover how much you need to take this year or in subsequent years. If you don’t take the correct RMD amount, IRS penalties may apply. If you're a T. Rowe Price client with an RMD eligible account, log in to manage your RMD.

How can I take my distributions?

You can satisfy your RMD through a one-time transaction or automatic withdrawals from eligible accounts. As a T. Rowe Price client, you can log in and set up your RMD with our Auto-RMD tool.

What if I have multiple accounts?

If you have more than one IRA, you must calculate the appropriate RMD for each individually. However, you can take your total distribution from any one or more of the IRAs. Similar rules apply to 403(b) accounts. However, RMDs from other types of retirement plans, such as 401(k) plans, must be taken separately from each of those plan accounts.

What if I have a workplace retirement account?

You will have to contact your current and/or prior employer to calculate the RMD and request a distribution. If your workplace account is with T. Rowe Price, you can log in now to learn more about your RMD.

If you don’t need your RMD for living expenses, here are three options:

Reinvest your RMD.

You can use it to potentially grow your investment portfolio. Simply reinvest the distribution into an existing general investing account or open a new general investing account to help you save for goals that are important to you. Earnings in a general account are taxable, but you have the flexibility to manage the money without limits, penalties or restriction.

Help a loved one pay for college.

You can use your RMD to invest in a 529 college savings plan. These funds can be used for college costs, but also K-12 expenses and student loan repayment. Any earnings are tax-free when used for qualified expenses.*

Support a charity you believe in.

Satisfy your RMD by donating up to $100,000 to one or more eligible charities, known as a qualified charitable distribution (QCD). The distribution is excluded from taxable income.

Get more answers about RMDs.

 

RMD's aren't optional. So, if you are approaching 72, or already there, or if you’ve inherited an IRA, now is a good time to discover more about RMDs.

Make your RMD easy.

 

We've made it simple to set up your required minimum distribution application for your T. Rowe Price IRAs. As a T. Rowe Price client, you can log in and set up your distribution using our Auto-RMD tool. The entire process only takes about 20 minutes, and if you have questions or need help, our retirement specialists are available to assist you.

How much will your RMD be?

 

Our RMD calculator can help you estimate your annual distribution amount. You will need to calculate your RMD each year because it is based on your current age and account balances at the prior year-end.

Have more RMD questions? Speak with a T. Rowe Price Financial Consultant at 1-888-421-0563.

All investments are subject to market risk, including the possible loss of principal.

This material has been prepared for general and educational purposes only. This material does not provide recommendations concerning investments, investment strategies, or account types. It is not individualized to the needs of any specific investor and is not intended to suggest that any particular investment action is appropriate for you, nor is it intended to serve as the primary basis for investment decision-making. Any tax-related discussion contained in this material, including any attachments/links, is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding any tax penalties or (ii) promoting, marketing, or recommending to any other party any transaction or matter addressed herein. Please consult your independent legal counsel and/or tax professional regarding any legal or tax issues raised in this material.

*Be sure to review any 529 college savings plan offered by your home state or your beneficiary’s home state, as there may be state tax or other state benefits, such as financial aid, scholarship funds, and protection from creditors that are only available for investments in the home state’s plan. Be sure to read the college savings plan’s disclosure document, which includes investment objectives, risks, fees, charges and expenses, and other information you should read and consider carefully before investing. Tax benefits may be conditioned on meeting certain requirements, such as residency, purpose for or timing of distributions, or other factors, as applicable.

While distributions from 529 college savings plans for elementary or secondary education tuition expenses are federally tax-free, state tax treatment will vary and could include state income taxes assessed, the recapture of previously deducted amounts from state taxes, and/or state-level penalties.