Required Minimum Distribution (RMD)
The minimum amount you must withdraw each year from certain retirement accounts once you reach a set age.
Required Minimum Distributions are mandatory annual withdrawals from tax-deferred retirement accounts (such as a Traditional IRA or 401(k)) that begin at a legally defined age. They ensure the deferred taxes are eventually paid, and missing them can trigger penalties.
Examples
- After the required age, a retiree must withdraw a calculated amount from their IRA each year.