What Is Required Minimum Distribution (RMD)?
The minimum amount the IRS requires you to withdraw annually from certain retirement accounts after a certain age.
The Full Definition
A Required Minimum Distribution (RMD) is the minimum amount the IRS forces you to withdraw each year from tax-deferred retirement accounts — like a Traditional IRA or 401(k) — once you reach a certain age (currently 73, scheduled to rise to 75 by 2033). RMDs exist because the government deferred taxes on that money for decades and eventually wants its share; missing one triggers a steep penalty. Roth IRAs are not subject to RMDs during the original owner's lifetime, which is one reason some retirees convert Traditional balances to Roth before RMD age.
Real-World Example
A 73-year-old with $500,000 in a Traditional IRA might be required to withdraw roughly $18,000–$20,000 that year, whether or not they actually need the cash, simply because the IRS requires it once that age is reached.