Retirement FAQs—RMDs

When you turn age 73*, the IRS will require you to begin taking withdrawals from certain types of retirement accounts (in most cases, it doesn't matter when you actually retire). Calculating these required minimum distributions (RMDs) can be tricky, but we can help.

Once you reach RMD age, you must withdraw at least a minimum amount—your required minimum distribution—each year from your tax-deferred retirement savings accounts. This includes your IRAs (with the exception of Roth IRAs) and any qualified retirement accounts you hold with a former employer.

Generally, you must take your first RMD by April 1 of the calendar year following the year you reach RMD age. (Participants in employer plans who are still working at RMD age may be permitted to wait until April 1 of the calendar year following the year they retire.) For each subsequent year, you'll need to take your annual RMD by December 31.

If you're RMD age, Vanguard will automatically calculate the RMD amount each year for your tax-deferred IRAs and Individual 401(k)s held at Vanguard. Once enrolled, you can view your RMD service online. In addition to calculating your RMD amount, Vanguard's RMD Distribution Service, a free service, allows you to set up your RMD on IRAs to be automatically distributed each year.

To perform the calculations yourself, use our Required Minimum Distributions kit. Each year's RMD is equal to your retirement account balance as of December 31 of the previous year (adjusted for any outstanding rollovers or asset transfers that were not in an IRA account at the end of the year) divided by your life expectancy factor according to the Uniform Lifetime Table. (If your spouse is your sole beneficiary and is more than ten years younger than you, use the Joint Life and Last Survivor Table. It's available at IRS.gov.)

The IRS.gov link will open in a new browser window. Vanguard accepts no responsibility for content on third-party websites.

Allow 5 to 10 minutes to enroll in Vanguard's RMD Service online. Leave more time if you are taking RMDs from an IRA that you inherited or from a small business retirement plan, because you will have more options to consider or more information to provide.

1. Account selection. Identify the retirement plans for which you would like us to calculate your RMD.
2. Review calculation results and select service type. After verifying certain information, review your calculated RMD amount for accuracy and decide if you want Vanguard to distribute your RMD for you each year.
3. Option details. If you decide to set up automatic distributions, tell us how often you'd like to receive payments and from which funds we should take your RMD.
4. Verify and confirm. As a last step, review your RMD information and edit it, if necessary. After you sign up, we'll mail you a confirmation. You'll receive your newly calculated RMD by mail every January

The date of death of the original IRA owner determines what options you as the beneficiary have. If you are an IRA beneficiary, the online enrollment process is more complex because you have more decisions to make. If you're eligible to enroll in our RMD Service, allow about 30 minutes for the enrollment process.

For an inherited IRA received from a decedent who passed away after December 31, 2019:

Generally, a designated beneficiary is required to liquidate the account by the end of the 10th year following the year of death of the IRA owner (this is known as the 10-year rule). There are exceptions for certain eligible designated beneficiaries, as defined by the IRS, as someone who is either:

1. The IRA owner's spouse.
2. The IRA owner's minor child.*
3. An individual who is not more than 10 years younger than the IRA owner.
4. Disabled.
5. Chronically ill.

*Once a minor child reaches the age of majority, they'll become subject to the 10-year rule.

An eligible designated beneficiary may choose to use either the 10-year rule or the lifetime distribution rules that were in effect prior to 2020 and are specified in the "For an inherited IRA received from a decedent who passed away before January 1, 2020" section below.

Note: Vanguard's RMD Service doesn't accommodate accounts that are being distributed according to the 10-year rule. If you've elected, or are required, to use the 10-year rule for your inherited account, you should consult a tax advisor to calculate your required minimum distribution. A non-designated beneficiary (e.g., a non-individual such as an estate or charity) would generally be subject to the 5-year rule if the account owner died before he or she was required to begin taking RMDs (April 1st of the year following the year in which the owner reached RMD age). If the IRA owner passed away on or after April 1st of the year following the year in which the owner reached RMD age, the non-beneficiary would be subject to RMD based on the original IRA owner's life expectancy factor. Special rules apply for certain types of trusts.

For an inherited IRA received from a decedent who passed away before January 1, 2020:

When a beneficiary becomes entitled to an IRA from an account owner who died before he or she was required to begin taking RMDs (April 1st of the year following the year in which the owner reached RMD age), the beneficiary can choose one of two methods of distribution: over his or her lifetime or within five years (the "five-year rule").

Lifetime distribution

Spouse as sole primary beneficiary. If the owner's spouse chooses to take the IRA as a beneficiary rather than assume the account, he or she can choose when to begin taking RMDs on the basis of his or her own life expectancy. The spouse must begin taking RMDs by the later of December 31 of the year after the owner's death or December 31 of the year the owner would have reached RMD age. The spousal beneficiary should not enroll in our RMD Service until the year he or she intends to begin taking RMDs. If the owner's spouse chooses to assume the IRA, he or she must begin taking RMDs by the later of December 31 of the year after the owner's death or April 1 of the year after the spouse reaches RMD age.

Nonspouse and when spouse is not sole primary beneficiary. An individual nonspouse beneficiary must begin taking RMDs on the basis of his or her own life expectancy by December 31 of the year after the owner's death. Multiple beneficiaries can take RMDs on the basis of their own life expectancies if all of the beneficiaries have established separate accounts by December 31 of the year after the owner's death and starting in that year. If all multiple beneficiaries have not established separate accounts by that December 31 date, all beneficiaries must take RMDs on the basis of the oldest beneficiary's life expectancy starting in the year after the owner's death.

Five-year rule

Any individual beneficiary may elect to distribute the inherited IRA assets over the five years following the owner's death. The distribution must be completed by the end of the year containing the fifth anniversary of the owner's death. Any non-individual beneficiary (except for a qualified trust) must use the five-year rule if the owner died before beginning to take RMDs.

Note: Vanguard's RMD Service doesn't accommodate accounts that are being distributed according to the five-year rule. If you've elected, or are required, to use the five-year rule for your inherited account, you should consult a tax advisor to calculate your required minimum distribution.

Generally, a designated beneficiary is required to liquidate the account by the end of the 10th year following the year of death of the IRA owner (this is known as the 10-year rule). There are exceptions for certain eligible designated beneficiaries, as defined by the IRS, as someone who is either:

1. The IRA owner's spouse.
2. The IRA owner's minor child.**
3. An individual who is not more than 10 years younger than the IRA owner.
4. Disabled.
5. Chronically ill.

*Once a minor child reaches the age of majority, they'll become subject to the 10-year rule.

An eligible designated beneficiary may choose to use either the 10-year rule or the lifetime distribution rules that were in effect prior to 2020 and are specified in the "For an inherited IRA received from a decedent who passed away before January 1, 2020" section below.

The 10-year rule is the new distribution requirement for most inherited IRAs (exceptions apply) that were received from an original IRA owner who passed away after 2019.

The 10-year rule requires the inherited IRA to be liquidated by the end of the 10th year following the year of the original IRA owner's death. If the original IRA owner passed away before he or she was required to begin taking RMDs (April 1 of the year following the year they reached RMD age, called your required beginning date or RBD) then no distribution would be required in years 1-9. However, if the original IRA owner passed away on or after he or she was required to begin taking RMDs (again, April 1 of the year following the year they reached RMD age) then an RMD may be required to be taken for years 1-9 and all remaining account assets liquidated in the tenth year.¹

Note: Vanguard's RMD Service doesn't accommodate accounts that are being distributed according to the 10-year rule. If you've elected, or are required, to use the 10-year rule for your inherited account, you should consult a tax advisor to calculate your required minimum distribution. A non-designated beneficiary (e.g., a non-individual such as an estate or charity) would generally be subject to the 5-year rule if the account owner died before he or she was required to begin taking RMDs (April 1st of the year following the year in which the owner reached RMD age). If the IRA owner passed away on or after April 1st of the year following the year in which the owner reached RMD age, the non-beneficiary would be subject to RMD based on the original IRA owner's life expectancy factor. Special rules apply for certain types of trusts.

When a beneficiary becomes entitled to an IRA from an account owner who died before he or she was required to begin taking RMDs (April 1st of the year following the year in which the owner reached RMD age), the beneficiary can choose one of two methods of distribution: over his or her lifetime or within five years (the "five-year rule").
 

Lifetime distribution

Spouse as sole primary beneficiary. If the owner's spouse chooses to take the IRA as a beneficiary rather than assume the account, he or she can choose when to begin taking RMDs on the basis of his or her own life expectancy. The spouse must begin taking RMDs by the later of December 31 of the year after the owner's death or December 31 of the year the owner would have reached RMD age. The spousal beneficiary should not enroll in our RMD Service until the year he or she intends to begin taking RMDs. If the owner's spouse chooses to assume the IRA, he or she must begin taking RMDs by the later of December 31 of the year after the owner's death or April 1 of the year after the spouse reaches RMD age.

Nonspouse and when spouse is not sole primary beneficiary. An individual nonspouse beneficiary must begin taking RMDs on the basis of his or her own life expectancy by December 31 of the year after the owner's death. Multiple beneficiaries can take RMDs on the basis of their own life expectancies if all of the beneficiaries have established separate accounts by December 31 of the year after the owner's death and starting in that year. If all multiple beneficiaries have not established separate accounts by that December 31 date, all beneficiaries must take RMDs on the basis of the oldest beneficiary's life expectancy starting in the year after the owner's death.

Five-year rule

Any individual beneficiary may elect to distribute the inherited IRA assets over the five years following the owner's death. The distribution must be completed by the end of the year containing the fifth anniversary of the owner's death. Any non-individual beneficiary (except for a qualified trust) must use the five-year rule if the owner died before beginning to take RMDs.

Note: Vanguard's RMD Service doesn't accommodate accounts that are being distributed according to the five-year rule. If you've elected, or are required, to use the five-year rule for your inherited account, you should consult a tax advisor to calculate your required minimum distribution.

If you are a non-spouse beneficiary of a deceased plan participant and rolled a distribution of plan assets into an inherited IRA by December 31 of the year following the participant's death, you can take RMDs from the inherited IRA following the rules applicable to IRAs. If the rollover took place after December 31 of the year following the participant's death, the distribution rules under the employer plan carry over to the IRA. You should contact the plan sponsor or a tax advisor to determine the rules applicable to your situation.

If you inherited your IRA or employer-sponsored retirement account from:

• The person who originally opened the account, or
• That person's surviving spouse and sole primary beneficiary who "assumed" the IRA (or rolled over the retirement account into an IRA) and re-registered it in his or her own name, then you inherited your account from the original owner.

In all other cases, you did not inherit your account from the original owner. If the account of the individual you inherited the IRA from was registered in that person's name as beneficiary of ("BENE OF") the original owner, you did not inherit your IRA from the original owner. If you are not certain whether or not the original owner's surviving spouse "assumed" the account and became its new owner, contact us.

Beneficiaries who receive an inherited IRA from a deceased inherited IRA owner who passed away after 2019 must follow the 10-year rule. While beneficiaries who receive an inherited IRA from a deceased inherited IRA owner who passed away before 2020 must generally continue taking RMDs based on the schedule established by the deceased inherited IRA owner; beneficiaries of the deceased inherited IRA owner can't use their own life expectancies when calculating RMDs.

Examples

Situations where you inherit the retirement account from the original owner:

• Your parent established an IRA and named you as beneficiary. When that parent dies, you inherit the IRA from the original owner.
• Your father established an IRA and named your mother as beneficiary. At his death, she assumed the IRA and became, in effect, the original owner because she re-registered the account in her name. She named you as her beneficiary. At her death, you will inherit the IRA from the original owner.

A situation where you do not inherit the retirement account from the original owner:

• Your father established an IRA and named your mother as beneficiary. At his death, she inherited (did not assume because she did not re-register the account in her name) the IRA and named you as her beneficiary. At her death, you will not inherit the IRA from the original owner.

Several years may have passed since you first named IRA beneficiaries, and your designations may be obsolete due to marriage, divorce, births, or deaths. You'll want to ensure your beneficiary designations reflect your actual intentions and those designations can affect the amount of your required minimum distribution.

For example, if your sole primary beneficiary is your spouse, and your spouse is more than ten years younger than you, you'll use a different life expectancy table and probably make a smaller distribution. (See How do I calculate my RMD?) You can review and update your beneficiary designations for your Vanguard accounts online.

Consider moving them to Vanguard. All of your retirement accounts will then be eligible for our RMD Service. If you are RMD age, remember to take the current year's RMD before transferring or rolling over each account. We can even help you with the transfers. Learn more about moving your IRAs to Vanguard

Once you determine your RMD, you can satisfy it with withdrawals from any combination of IRAs. For instance, if you have three IRAs with a combined RMD of $4,500, you can take that amount from any of the IRAs.

If you have employer-sponsored retirement plans, such as 401(k), 403(b), money purchase pension, or profit-sharing plans, you'll need to calculate each RMD separately and withdraw the appropriate distribution from each plan.

You can tap any of the Vanguard mutual funds in your retirement account. Generally, you have three options. You can withdraw a specific amount from each fund, withdraw a certain percentage of your RMD from each of several funds, or withdraw from each fund according to its share of the IRA assets.

To learn more about the funds in your account, visit Funds, Stocks & ETFs. To consult with a licensed financial advisor, consider our guidance and advice services.

If you don't need your RMD for current living expenses, you can keep it working for you by immediately reinvesting it in a Vanguard nonretirement account. (If you do not already have such an account, you'll need to create one.) You can purchase any Vanguard fund with your RMD, as long as you meet the fund's minimum investment requirement. If your nonretirement portfolio needs rebalancing, you can use the RMD to purchase more of your underweighted asset class. Our RMD Service can automatically transfer your distribution to a Vanguard nonretirement account if you wish.

Yes, but not through Vanguard's RMD Service. You can arrange single distributions from your IRA at any time online through your Vanguard.com account or by completing and submitting an IRA Distribution Request form.

Alternately, you can sign up for our Automatic Exchange Service and schedule transfers from your IRA to a nonretirement Vanguard account. You can also use our Automatic Withdrawal Service to schedule regular withdrawals from your IRA to your bank or credit union account.

Yes. If you're an eligible IRA owner, you can have your RMD made payable directly to a qualified charity—up to $100,000 annually. You'll satisfy your distribution requirement, and generally this "qualified charitable distribution" (QCD) is not subject to ordinary federal income taxes – the amount is simply excluded from your taxable income.

In general, QCDs must be reduced by deductible IRA contributions made for the year you reach age 70½ or later. If you've made deductible IRA contributions for the year you turn 70½ or later, consult a qualified tax advisor prior to taking a QCD to determine the amount by which your QCD must be reduced.

Distributions from a traditional, deductible IRA are fully taxable as ordinary income. If you are taking distributions from an IRA which was partially or fully funded with nondeductible contributions, some or all of your RMD will be tax. (Use IRS Form 8606 to calculate and report the exempt portion.)

RMDs from an inherited Roth IRA are not taxed unless they represent a return of earnings and then only if the earnings are distributed within five years after the Roth IRA was established.

For RMD amounts that were required to be withdrawn for the 2022 tax year, you may be subject to a 50% tax penalty. For RMD amounts required to be taken for tax years starting in 2023 forward, that tax penalty will be reduced to 25% with an opportunity to further reduce the penalty to 10% if the failure is corrected in a timely fashion. Speak to your tax adviser for more information.