Life · Chapter 11 · Rollovers & Distributions
Required Minimum Distributions (RMDs)
Definition
Mandatory annual withdrawals from a traditional IRA beginning by April 1 of the year after the owner turns 73 (SECURE Act 2.0). Missing one triggers a 25% excise tax on the amount not taken — reduced to 10% if corrected within two years.
Exam tip
Roth IRAs have NO RMDs during the owner's lifetime — a favorite exam contrast; since 2024 neither do designated Roth accounts in a 401(k)/403(b) (SECURE 2.0). Inherited IRAs: the old "stretch" is dead. Most non-spouse beneficiaries must empty the account within 10 years (SECURE Act). Exceptions ("eligible designated beneficiaries"): a surviving spouse, the owner's minor child, a disabled or chronically ill beneficiary, or anyone not more than 10 years younger than the owner.
Easy to confuse with
These are what this term gets tested against — if you can't tell them apart cold, drill the contrast.
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