RMD (Required Minimum Distribution)

The minimum amount the IRS requires you to withdraw annually from tax-deferred retirement accounts starting at age 73. Failure to take RMDs results in a 25% excise tax on the amount not withdrawn.

RMDs force money out of traditional IRAs and 401(k)s so it can finally be taxed. The amount is your prior year-end balance divided by an IRS life-expectancy factor, and missing one has historically carried a steep excise penalty on the shortfall.