At what age do RMDs stop?

Required minimum distributions (RMDs) are the amounts you have to withdraw from certain retirement accounts each year. They usually apply to employer-sponsored retirement accounts as well as individual retirement accounts (IRAs).

Age 72 is when RMDs start, but you might wonder at what age RMDs stop. Simply put: They don't. They continue indefinitely. You have to keep making withdrawals even if you don't need the cash.

You can use your RMD in a variety of ways. In addition to using the extra income for special purchases or to care for your loved ones, these distributions can become part of your charitable giving strategy.

Here's a look at some of the most common questions about RMDs so you can make the best choices about your retirement portfolio. (Keep in mind that these pertain to accounts that have always belonged to you, not inherited accounts.)

RMDs start the tax payment process on traditional retirement accounts where taxes were not paid on the money as it was deposited into the account. The Internal Revenue Service (IRS) relies on people eventually paying taxes on these accounts, and RMDs boost your taxable income.

Note: If you contributed to Roth retirement accounts, you already paid taxes when you deposited the money. That's why Roth accounts don't have RMDs.

You must begin drawing RMDs at age 72. You can withdraw money before then—and you'll still pay taxes on it—but before age 72, it's your choice whether to take money out or not.

After 72, you'll have to withdraw at least the RMD amount and pay tax on your withdrawals every year going forward. If you choose to withdraw more than the RMD, you'll owe income tax on that money as well.

RMDs don't stop once they begin. You'll be able to calculate your minimum distribution at the beginning of each calendar year, and you'll have to take it by the end of that year.

The easiest way to calculate your RMD is to ask the administrator of your account, but you also can calculate it yourself using an RMD calculator. To do it on your own, you'll need:

• Your age
• Your account balance as of December 31 of the previous year
• The most recently updated Uniform Lifetime Table
  

Using your information and the table, look for the life expectancy factor associated with your age. For example, per the 2022 table, a 75 year old has a life expectancy factor of 24.6.
To determine the RMD, divide your account balance by the life expectancy factor. Using the example above, if that 75-year-old had $200,000 in a traditional IRA at the end of the previous year, that balance divided by 24.6 would put that person's RMD at $8,130.08.

If you just turned 72, you have until April 1 of the next calendar year to take your first distribution. But you'd also need to take a second distribution by December 31 of that same year. After that, you'll continue having to take the required amount by December 31. Your RMD will count as income that you'll need to to pay taxes on via your annual income tax return, which for most people is due in April of the following year.

The IRS has a penalty if you forget to take your RMD or if you take less than the correct amount. The fee is 50% of the RMD amount that was missed. So if you were required to take $8,000 and only withdrew $4,000, you'd owe $2,000 to the IRS.

It can be valuable to work with a financial advisor if you think you might forget or miscalculate your RMDs. These professionals can work with you on a personalized retirement withdrawal strategy.

You have to calculate the yearly RMD for each traditional retirement account. However, the IRS does offer one simplification option for those with a mix of Traditional IRAs and 403(b) accounts: You can calculate your RMD for all IRAs and withdraw the total required from your IRAs from one individual account. The same goes for 403(b) accounts, you can calculate them together and take the withdrawal from one 403(b) account.

All other account types, however, have to satisfy its own RMD. If you are eligible for this option, you can talk with your financial advisor to determine which withdrawal method is most beneficial to you.

A financial advisor spends time learning the regulations for RMDs and stays updated when the IRS guidelines change. As a result, they can bring a valuable perspective as you begin planning your income and spending strategy in retirement.

Connect with a local Thrivent financial advisor for all retirement planning needs, including navigating the rules and regulations around required minimum distributions. These trusted professionals act with your best interests in mind and can advise you on how to use your retirement savings to achieve your goals of living generously and connecting with others.