1. Age 73 is the current age at which you begin taking Required Minimum Distributions (RMDs) from your retirement accounts, though this was previously 70 ½. The Internal Revenue Service (IRS) mandates these withdrawals, and the rules dictate how long you have to pay. Many people wonder: when do these distributions actually stop?

The simple answer is that you must continue taking RMDs for your lifetime. However, the situation changes when the account owner passes away. After your death, your beneficiaries will inherit the retirement accounts, and the rules regarding RMDs then shift, depending on who inherits the funds.

For a surviving spouse who is the sole beneficiary, the spouse can typically roll over the inherited assets into their own retirement accounts, effectively continuing RMDs based on their own age and life expectancy. For other beneficiaries, such as children or other relatives, the rules become more complex. They may be subject to distribution requirements and timelines, which depend on how quickly they choose to withdraw the funds.

Expert opinions

Expert Opinion: Dr. Eleanor Vance, CFP®

Hello, I'm Dr. Eleanor Vance, a Certified Financial Planner® with over 20 years of experience helping individuals navigate retirement planning. Today, I'll address the question: At what age do you stop paying Required Minimum Distributions (RMDs)?

The answer is straightforward, but the details are crucial for your financial well-being. You generally stop taking RMDs at the age of death.

Let me elaborate:

• RMDs are not optional once you are required to take them. The IRS mandates that you begin withdrawing money from certain retirement accounts, like Traditional IRAs, 401(k)s (if retired), 403(b)s, and SEP IRAs, after a specific age. These withdrawals are taxed as ordinary income. The government requires these withdrawals because the money in these accounts has received tax benefits (either deductions or tax-deferred growth), and the government wants to collect its tax revenue.
• The age for starting RMDs is currently 73. This age was raised from 70 ½ and is subject to change by Congress. For individuals who reached age 72 in 2023, they will begin taking RMDs at age 73. It's important to stay informed of any legislative changes that might affect this threshold.
• The amount of your RMD is determined each year. The amount is calculated based on the account balance as of December 31st of the prior year and your life expectancy factor, which the IRS provides in tables (called Uniform Lifetime Table). These factors change annually as you age. Financial institutions holding your retirement accounts will generally help calculate this for you.
• There are exceptions to this age: There are several scenarios in which you may not have to take RMDs:
  • Roth IRAs: Contributions to Roth IRAs and their earnings are never subject to RMDs, a significant benefit of this retirement account type.
  • Certain 401(k)s (if still working): If you are still employed (and not an owner) you may be able to delay the RMDs from your current 401(k) plan until retirement. However, this does not apply to IRAs.
  • Qualified Charitable Distributions (QCDs): You may be able to donate your RMD amount directly to a qualified charity, which may be beneficial for tax savings and may even satisfy your RMD requirements up to a certain limit.
• Missing RMDs can have serious consequences: The penalty for failing to take a required RMD is a substantial 25% excise tax on the amount you should have withdrawn but didn't. This can be reduced to 10% if the failure is corrected within a specific time frame.

In summary: You stop taking RMDs at the time of your death (or potentially sooner if you utilize a strategy like a Roth IRA or certain charitable donations). It's crucial to understand your specific circumstances and RMD requirements. I strongly advise you to consult with a qualified financial advisor or tax professional to develop a personalized plan and ensure compliance with the IRS regulations. They can help you navigate the complexities of RMDs and help you maximize your retirement income.

At What Age Do You Stop Paying RMD? – FAQ

Q: At what age do Required Minimum Distributions (RMDs) from retirement accounts typically begin?
A: RMDs generally start at age 73 for individuals who attained age 72 after December 31, 2022. This rule can be subject to change based on current legislation.

Q: Is there an age when RMDs are no longer required?
A: Yes, you continue to take RMDs for the rest of your life. The IRS requires distributions until the account is fully depleted.

Q: Does working after age 73 (or older) impact RMD requirements?
A: No, continuing to work has no bearing on the requirement to take RMDs once the distribution age is reached. RMDs are based on the account's value, not your employment status.

Q: Are there any exceptions to the RMD rules that would allow you to avoid taking them?
A: Only if the account is a Roth IRA. Roth IRAs do not require RMDs during the owner's lifetime. Other types of accounts require RMDs.

Q: What happens if I miss an RMD or don't take the full amount?
A: There's a significant penalty. The IRS can assess a penalty equal to 25% of the amount you failed to withdraw. This penalty can be reduced to 10% if corrected within a certain timeframe.