Required minimum distribution (RMD)What to know about your RMD

Yes, we will calculate RMDs on IRAs you hold with Fidelity.

Your RMD is generally determined by dividing your tax-deferred retirement account balance as of December 31 of the preceding year by a life expectancy factor. Your life expectancy factor corresponds with your age in the IRS Uniform Lifetime Table (PDF).

It’s important to withdraw your RMD by the appropriate deadline because the IRS penalty for missed RMD amounts is 25% for calendar years 2023 and beyond, and 50% for calendar years 2022 and earlier.

For example, say you’re 74 years old and your RMD for calendar year 2023 was $10,000, but you only withdrew $5,000 by December 31. The 25% penalty would apply to the remaining $5,000 you did not take on time. This means that you may owe the IRS $1,250 for not taking your RMD by the deadline.

If you miss an RMD, you can ask the IRS for a waiver of the penalty. You can find information the penalty and how to request a waiver in the instructions for IRS Form 5329. A tax advisor can also help you through the waiver process.

The IRS taxes RMDs as ordinary income. This means that withdrawals will count towards your total taxable income for the year. Keep in mind that this income increase may push you into a higher tax bracket and may impact the taxes you pay for your Social Security or Medicare.

If you’d like to reduce the effect of RMDs on your taxes, consider making a qualified charitable distribution (QCD). A QCD excludes the amount you donate from taxable income and can be counted toward satisfying your RMD for the year, as long as certain rules are met.

Clients of Fidelity can view their RMD activity in the Retirement Distribution Center (RDC)Log In Required for IRAs held with Fidelity. If you recently transferred an account to Fidelity from another financial institution, your RMD amount will not appear in the RDC because we don't know what your prior year-end balance was. In this instance, you can use our RMD Calculator to determine your RMD for this year, and we will provide your calculated amount in subsequent years.  

If you have multiple IRAs, you have the option to take all your RMDs from a single IRA. You may also choose to withdraw RMDs from multiple 403(b) accounts from a single 403(b). If you have multiple 401(k) accounts, you must withdraw your RMD separately for each 401(k).

• For traditional IRAs, rollover IRAs, SEP IRAs, SARSEP IRAs, and SIMPLE IRAs: you must calculate the RMD for each of these accounts separately, but you can withdraw the total RMD amount from one or any combination of these IRA types.
• The same RMD withdrawal methodology can be applied to 403(b)s. 403(b) RMDs cannot be aggregated with non-403(b) RMDs.
• For 401(k) and or Fidelity Retirement Plan accounts: RMDs must be calculated separately for each account and the calculated amount must be taken from its respective account.

Yes, you can reinvest the RMD money you take from your Fidelity retirement accounts. Your reinvestment could be made in a taxable non-retirement account, like a Fidelity brokerage account.

You don’t have to take RMDs from a Roth IRA if you’re the original account owner. However if you have inherited a Roth IRA, you are subject to RMD Rules.

Withdrawing from a Roth IRA will not count toward meeting the RMD for IRAs or retirement accounts that do have a requirement to withdraw.

You always have the option to convert your Traditional IRA into a Roth IRA. However, if you’re age 73 or older, you will have to take your RMD for the year before you convert. Remember, a Roth conversion is a taxable event. We encourage you to speak to a tax advisor about how a conversion could impact the taxes you owe.

The IRS does not allow you to convert your RMD to a Roth IRA. However, after you have withdrawn your RMD for the year from your IRA, you can convert all or part of the remaining balance to a Roth IRA at any time. Our  Roth Conversion Calculator can help you decide if a Roth conversion is right for you. Remember a Roth conversion is a taxable event. We encourage you to speak to a tax advisor about how a conversion could impact the taxes you owe.

Yes, even if you continue working past age 73, you have to take an RMD from your IRA.

However, if you are still working, and you do NOT own more than 5% of the business you work for, you may qualify for an exception from taking RMDs from your current employer-sponsored retirement account, such as a 401(k), 403(b), or small business account until you retire.

No, you have no requirements on how you use the RMD money you take from your Fidelity retirement accounts.

Here are 3 ideas to consider before making your RMD and when planning how to use your RMD money (including immediate transfers to eligible Fidelity accounts):

• Donate it to a charity with a qualified charitable distribution (QCD) (Note: the QCD must go directly from the retirement account to the charity).
• Invest it by either doing it yourself in a brokerage account or getting Fidelity's investment help with a Fidelity managed account.
• Save it or spend it on your current living expenses using a Fidelity cash management account.

Already have a Fidelity brokerage or cash management account? Taking your RMD can be fast and simple by making an immediate online transferLog In Required.

No one wants to be 10 years into retirement and realize they have to return to work in order to pay the bills. Fidelity research finds that people should plan for their savings and pensions to replace 45% of their pretax, pre-retirement income, with the rest coming from Social Security.

You can potentially avoid running out of money by setting up 3 buckets for your savings: emergency, protection, and growth. Your protection bucket should have enough savings to fund your day-to-day life. Fidelity recommends keeping at least 3 to 6 months of essential expenses in your cash emergency fund.

The right amount of savings to have in your protection bucket depends on factors like your expected lifespan, retirement age, and your desired lifestyle.

IRS.gov has all the details on RMDs that need to be taken every year.

Starting when you're age 73, a required minimum distribution (RMD) is a specific amount of money the IRS requires you to take from your tax-deferred retirement accounts each year.

Be prepared. Have a plan for where your RMD(s) will go. If you are interested in continuing to grow and protect your money, reinvesting your RMD in a Fidelity taxable account may be a good option. Will you need the money for everyday and other expenses? If so, you may consider transferring your RMD to a Fidelity cash management account.¹ If you don’t have an existing Fidelity taxable account, or cash management account, you may decide to establish one or the other prior to taking the RMD(s) from your retirement account(s).

Traditional IRA, Rollover IRA, SIMPLE IRA, Workplace plans, such as 401(k), or 403(b), SEP IRA, Inherited IRA, Inherited Roth IRA, inherited Roth 401(k), Profit sharing, Money Purchase and Self-employed 401(k).

Your RMD is generally determined by dividing your tax-deferred retirement account balance as of December 31 of the preceding year by a life expectancy factor. Your life expectancy factor corresponds with your age in the IRS Uniform Lifetime Table (PDF).

Yes, we will calculate RMDs on IRAs you hold with Fidelity.

Withdrawing online is the easiest way to take your RMD. To make a one-time withdrawalLog In Required from your IRA, you’ll follow these steps:

• Enter your withdrawal amount and select an account
• Set up a withdrawal date and where your withdrawals are sent
• Chose your tax withholding amount(s)
• If necessary, sell your investments to make cash available to withdraw

Clients of Fidelity can view their RMD activity in the Retirement Distribution Center (RDC)Log In Required for IRAs held with Fidelity. If you recently transferred an account to Fidelity from another financial institution, your RMD amount will not appear in the RDC because we don't know what your prior year-end balance was. In this instance, you can use our RMD Calculator to determine your RMD for this year, and we will provide your calculated amount in subsequent years.  

It’s important to withdraw your RMD by the appropriate deadline because the IRS penalty for missed RMD amounts is 25% for calendar years 2023 and beyond, and 50% for calendar years 2022 and earlier.

For example, say you’re 74 years old and your RMD for calendar year 2023 was $10,000, but you only withdrew $5,000 by December 31. The 25% penalty would apply to the remaining $5,000 you did not take on time. This means that you may owe the IRS $1,250 for not taking your RMD by the deadline.

If you miss an RMD, you can ask the IRS for a waiver of the penalty. You can find information the penalty and how to request a waiver in the instructions for IRS Form 5329. A tax advisor can also help you through the waiver process.

The IRS taxes RMDs as ordinary income. This means that withdrawals will count towards your total taxable income for the year. Keep in mind that this income increase may push you into a higher tax bracket and may impact the taxes you pay for your Social Security or Medicare.

If you’d like to reduce the effect of RMDs on your taxes, consider making a qualified charitable distribution (QCD). A QCD excludes the amount you donate from taxable income and can be counted toward satisfying your RMD for the year, as long as certain rules are met.

If you have multiple IRAs, you have the option to take all your RMDs from a single IRA. You may also choose to withdraw RMDs from multiple 403(b) accounts from a single 403(b). If you have multiple 401(k) accounts, you must withdraw your RMD separately for each 401(k).

• For traditional IRAs, rollover IRAs, SEP IRAs, SARSEP IRAs, and SIMPLE IRAs: you must calculate the RMD for each of these accounts separately, but you can withdraw the total RMD amount from one or any combination of these IRA types.
• The same RMD withdrawal methodology can be applied to 403(b)s. 403(b) RMDs cannot be aggregated with non-403(b) RMDs.
• For 401(k) and or Fidelity Retirement Plan accounts: RMDs must be calculated separately for each account and the calculated amount must be taken from its respective account.

Yes, even if you continue working past age 73, you have to take an RMD from your IRA.

However, if you are still working, and you do NOT own more than 5% of the business you work for, you may qualify for an exception from taking RMDs from your current employer-sponsored retirement account, such as a 401(k), 403(b), or small business account until you retire.

Yes, you can reinvest the RMD money you take from your Fidelity retirement accounts. Your reinvestment could be made in a taxable non-retirement account, like a Fidelity brokerage account.

You have plenty of options for how to use your RMDs. Among them:  

Living expenses if you plan to use RMDs to pay for current expenses. It often makes sense to have a budget in retirement. Going through the budgeting process can help you estimate living expenses, manage your cash flow, and determine if you’ll need to use your RMDs to fund your retirement lifestyle.  

For some retirees, Social Security and other income may cover expected expenses. Remember even though you may not need RMD monies to fund your retirement spending, you’re still required to take them out of your applicable retirement account(s). You could put your RMD(s) into taxable brokerage accounts and invest the proceeds according to a strategy that fits your needs.  

Charitable donations: If you have to satisfy an RMD and you would also like to make a gift to charity, then consider a qualified charitable distribution (QCD). A QCD is a direct transfer of funds from your IRA, payable to a qualified charity. Once you’ve reached RMD age, the QCD amount counts toward your RMD for the year, up to an annual maximum of $100,000 per individual, or $200,000 for married couple filing jointly ($100,000 from each of their respective IRAs). QCDs are not included in your gross income and don’t count against limits on deductions for charitable contributions. QCDs can have significant advantages for certain high-income earners.

Yes, the age to start taking RMDs increased to age 73 in 2023 and will increase to 75 in 2033. SECURE 2.0: Rethinking retirement savings.

You don’t have to take RMDs from a Roth IRA if you’re the original account owner. However if you have inherited a Roth IRA, you are subject to RMD Rules.

Withdrawing from a Roth IRA will not count toward meeting the RMD for IRAs or retirement accounts that do have a requirement to withdraw.

You always have the option to convert your Traditional IRA into a Roth IRA. However, if you’re age 73 or older, you will have to take your RMD for the year before you convert. Remember, a Roth conversion is a taxable event. We encourage you to speak to a tax advisor about how a conversion could impact the taxes you owe.

The IRS does not allow you to convert your RMD to a Roth IRA. However, after you have withdrawn your RMD for the year from your IRA, you can convert all or part of the remaining balance to a Roth IRA at any time. Our  Roth Conversion Calculator can help you decide if a Roth conversion is right for you. Remember a Roth conversion is a taxable event. We encourage you to speak to a tax advisor about how a conversion could impact the taxes you owe.

IRS.gov has all the details on RMDs that need to be taken every year.

You can withdraw money from an IRA before the age of 73 but if you withdraw before turning 59½, you’ll pay a 10% penalty in addition to ordinary income tax on your withdrawal. After 59½, a withdrawal from a traditional IRA does not carry a 10% penalty.

Starting when you're age 73, a required minimum distribution (RMD) is a specific amount of money the IRS requires you to take from your tax-deferred retirement accounts each year.

Be prepared. Have a plan for where your RMD(s) will go. If you are interested in continuing to grow and protect your money, reinvesting your RMD in a Fidelity taxable account may be a good option. Will you need the money for everyday and other expenses? If so, you may consider transferring your RMD to a Fidelity cash management account.¹ If you don’t have an existing Fidelity taxable account, or cash management account, you may decide to establish one or the other prior to taking the RMD(s) from your retirement account(s).

Yes, converting a traditional IRA to a Roth IRA lets you transfer all or portion of your traditional accounts into a Roth IRA. But it comes with a tax bill. Because contributions to a traditional IRA may be tax-deductible, income taxes are typically due on distributions from the account – and that includes conversions. You would have to pay income taxes on all the pre-tax contributions and tax deferred investment earnings converted to a Roth IRA.  

Our Fidelity viewpoint suggests, when saving for retirement, aim to save 1X your income by the age of 30, 3X by 40, 6X by 50, 8X by 60, and 10X by 67.

IRS.gov has all the details on RMDs that need to be taken every year.