RMD Rules Changed in 2023: What You Need to Know About Required Minimum Distributions

The IRS just changed the rules on when you have to start withdrawing money from your retirement accounts. If you thought age 72 was your magic number, think again. Starting in 2023, the age for required minimum distributions (RMDs) jumped to 73 for those who turn 72 that year, thanks to the SECURE 2.0 Act. This shift affects millions of retirement savers, so let’s break down what it means for your inherited IRA, traditional IRA, and 401(k) accounts.

What Changed and Why It Matters

The SECURE 2.0 Act represents the biggest shake-up to RMD rules since 2020, when the age was already bumped from 70.5 to 72. Now, if you were born in 1950 and turn 73 in 2023, that’s when your RMD countdown officially begins. Your first withdrawal must be taken by April 1 of the year following your 73rd birthday, with all subsequent RMDs due by December 31 each year.

The amount you withdraw isn’t arbitrary—it’s calculated based on two factors: your retirement account balance as of December 31 of the prior year and your life expectancy according to IRS tables. This is where an inherited IRA RMD calculator becomes invaluable, especially when managing multiple accounts across different custodians.

Which Accounts Require RMDs—And Which Don’t

Not all retirement accounts play by the same rules. RMDs apply to:

• Traditional IRAs and SEP IRAs
• SIMPLE IRAs and Rollover IRAs
• Most 401(k) and 403(b) plans
• Small business retirement accounts
• Inherited IRAs (with some nuances we’ll explain)

The major exception? Roth IRAs. Since you fund these with after-tax dollars, the IRS doesn’t force distributions during your lifetime. However, if someone inherits your Roth IRA, the rules flip dramatically.

How to Calculate Your RMD Step-by-Step

The calculation looks intimidating but it’s actually straightforward. You’ll need IRS Publication 590, which contains the official RMD tables including the Uniform Lifetime Table.

Here’s the process:

Step 1: Locate your age on the Uniform Lifetime Table (for example, age 78 has a life expectancy factor of 22.0)

Step 2: Find your retirement account balance as of December 31 of the previous year

Step 3: Divide the account balance by the life expectancy factor

Let’s work through a real example. Say you just turned 78 and your IRA balance was $100,000. Using the life expectancy factor of 22.0, your RMD would be $100,000 ÷ 22.0 = $4,545.45 for that year.

If you have a spouse who is more than 10 years younger and is your only primary beneficiary, you’ll use the Joint Life and Last Survivor Expectancy Table instead, but the calculation method remains identical.

Managing Multiple Retirement Accounts

Own both a 401(k) and a traditional IRA? You must calculate RMDs separately for each plan, but you have flexibility in how you withdraw the money. You can take distributions from each account individually or combine your total RMD amount and withdraw it from just one account—or any combination of them. This strategy becomes particularly useful if you want to deplete certain investments before others based on performance or tax considerations.

Special Rules for the 401(k) Still-Working Exception

Here’s a lesser-known loophole: if you’re still employed at the company sponsoring your 401(k) and you don’t own 5% or more of that company, you can delay your first RMD until after you actually retire. This doesn’t apply to IRAs—once you hit the magic age, IRAs demand their distributions. However, the moment you leave that employer after turning 72 or 73, the RMD requirement kicks in immediately.

The Inherited IRA Landscape: When an Inherited IRA RMD Calculator Becomes Critical

Inheriting a retirement account fundamentally changes the RMD math. The rules diverge sharply depending on whether a spouse, non-spouse beneficiary, or entity inherited the account.

Spousal Inheritance: Your Best-Case Scenario

A surviving spouse who inherits an IRA has exclusive privileges unavailable to other beneficiaries. You can treat the inherited account as your own IRA, which means no RMDs are required during your lifetime. Alternatively, you can set up an inherited IRA using the Single Life Expectancy Table and calculate RMDs based on your own age once you reach the triggering age.

If you’re younger than 59.5, rolling inherited assets into your own IRA lets you avoid the 10% early withdrawal penalty if you need funds before retirement age.

For an inherited IRA when you’re the spouse, RMD timing depends on your deceased spouse’s age:

• Spouse was 73 or older (turned 72 in 2023): Start RMDs by December 31 of the year following death
• Spouse was younger than 73: You can delay RMDs until your spouse would have reached age 73

Non-Spouse Inheritance: The 10-Year Rule

This is where the SECURE 2.0 Act reshuffled the deck. Non-spouse beneficiaries of inherited IRAs must now drain the full account balance within 10 years after the original owner’s death. Previously, beneficiaries could “stretch” distributions over their entire lifetime—that era is gone.

However, the law provides exceptions. If you’re a minor, disabled, chronically ill (per government definitions), or within 10 years of the original account holder’s age, you qualify for the old-style RMD rules. Under these circumstances, you’d begin taking RMDs by December 31 of the year following the owner’s death, using the IRS Single Life Expectancy Table.

The calculation requires you to identify the lower of either your age or the original owner’s age at their last birthday in the year they died, then use the corresponding life expectancy factor. Each subsequent year, you subtract 1 from that initial factor when recalculating your RMD.

If the original owner passed before reaching age 73, you’d use your own age as of December 31 of the year following their death to determine your life expectancy factor, again subtracting 1 each subsequent year.

Multiple non-spouse beneficiaries must each establish their own inherited IRA by December 31 following the original owner’s death. Failure to do so means calculating RMDs using the oldest beneficiary’s age.

Entity as Beneficiary: Trust and Charity Considerations

When an entity like a trust or charity inherits an IRA, RMD rules hinge on whether the original account owner had already reached age 73 by April 1 following their age 73 birthday. If they had, RMDs are calculated using the deceased owner’s Single Life Expectancy factor.

If the owner died before turning 73, the entity must withdraw the entire balance within five years following the year of death. Special rules apply to Look-Through Trusts, requiring professional tax and financial guidance.

Inherited Roth IRA RMDs: The Exception to the Exception

Roth IRAs typically dodge RMD requirements during the owner’s lifetime. This advantage carries over for spousal beneficiaries—a surviving spouse can treat an inherited Roth IRA as their own, eliminating any RMD obligation.

Non-spouse beneficiaries of inherited Roth IRAs fall under the same 10-year distribution rule as traditional IRAs. The good news: distributions from inherited Roths are tax-free if the account has been open for at least five years.

Inherited 401(k) Distributions: Plan Rules Matter

If you inherit a 401(k) from a spouse, you can keep it in the plan or roll it into an inherited IRA and follow spousal IRA RMD rules. Non-spouse beneficiaries who roll inherited 401(k) assets into an inherited IRA follow the standard non-spouse inherited IRA guidelines.

Be aware that individual 401(k) plan administrators sometimes impose stricter withdrawal rules—some may require lump-sum distributions or mandate five-year payouts regardless of federal law. Always contact your plan administrator for specifics. State inheritance laws and potential estate taxes may also apply depending on account size.

What Happens If You Miss Your RMD Deadline?

The IRS penalty for underfunding your RMD is severe: 50% of the shortfall amount. If you were supposed to withdraw $10,000 but only withdrew $6,000, the penalty would be 50% × $4,000 = $2,000 in taxes alone—on top of your income tax obligation on what you did withdraw.

Good news: you don’t have to take the entire RMD in one lump sum. Spread withdrawals throughout the year, just ensure the full annual RMD amount clears by December 31.

One Legal Way to Avoid RMDs Completely

While there’s no way around RMDs once triggered, one strategy sidesteps the requirement entirely: convert your traditional IRA or 401(k) to a Roth IRA or Roth 401(k). Yes, you’ll owe income tax on the conversion amount that year, but you’ll never pay RMDs again. Your money can grow tax-free indefinitely, and you can pass it to heirs with no forced distribution timeline, making this attractive for legacy planning.

The Bottom Line on RMDs

Required minimum distributions are non-negotiable once you reach age 73 (if you turn 72 in 2023 or later). The calculation is mechanical—use the IRS Uniform Lifetime Table, divide your prior year-end balance by your life expectancy factor, and withdraw by December 31. Inherited IRA situations demand extra attention due to the 10-year rule and beneficiary-type classifications. Whether managing your own RMD or navigating an inherited IRA RMD calculation, professional guidance from a tax advisor can help you optimize withdrawals, minimize taxes, and avoid costly penalties.