What is a Required minimum distribution?
A required minimum distribution is the minimum amount that retirement account owners must withdraw annually from their traditional IRAs, 401k plans, and other tax-deferred retirement accounts beginning at age 73. The IRS calculates these mandatory distributions based on the account balance and the owner's life expectancy using actuarial tables. Failure to take required distributions results in a 25% penalty on the missed amount. Traditional 401k accounts and traditional IRAs are subject to these requirements, while Roth IRAs have no lifetime distribution requirements for the original owner.
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