How do required minimum distributions (RMDs) work?

Key Takeaways

• Once you turn 73, you’re generally required to take annual withdrawals from certain retirement accounts.
• How you use your RMD can affect your taxes and financial plan. You may use it for spending, to make charitable gifts or to support your legacy goals.
• Planning ahead may help manage future RMDs. Strategies such as Roth conversions, taking additional distributions in lower-tax years or delaying RMDs from a current employer plan may help manage future taxable income.

Once you turn 73, you’re generally required to start withdrawing money from certain retirement accounts, such as your traditional IRA, 401(k) or similar employer-sponsored retirement plans. This annual withdrawal is known as a required minimum distribution (RMD).

Determining how much to take out of your retirement accounts can be complicated. You’re required to take out a certain amount determined by the IRS. But there are other factors to consider, including how your spending needs may change, how long your income sources need to last, how much income each source will provide and when you’ll begin receiving those payments.

As a result, how and when you take your required minimum distributions is an important planning opportunity that can affect your retirement income, taxes and legacy. Edward Jones can help you understand the rules and consider how your distributions fit into your broader financial picture.

What are RMDs?

Your RMD for any given year is the account balance as of the end of the prior calendar year divided by a life expectancy factor determined by the IRS. The IRS provides resources to help you calculate your RMD.

If you don’t, you’ll take a significant hit: The IRS penalty for not taking the RMD is 25% of the amount not taken by the deadline (though it may be lower if corrected in a timely manner). The deadline to take your first RMD is usually April 1 of the year after you turn 73, and Dec. 31 each year after that.

Your financial institution or retirement plan administrator processes your distribution. An Edward Jones financial advisor can help you understand which accounts are subject to RMDs, estimate the required amount and plan the timing of your withdrawals.

How can you use your RMDs?

If you need your RMD to pay for your living expenses in retirement, it should be one of the first sources you draw from since you’re required to take that money. However, if you don’t need it to pay for living expenses, you can use your RMD in several ways:

• For instance, you could reinvest the cash into a taxable account so it continues to have the opportunity to grow. Or, if you want that money to go to others, you can open or contribute to a 529 account for your grandchildren or even help your adult children “max out” their IRAs. In fact, you can give up to $19,000 per recipient in 2026 without incurring any gift taxes.
• Additionally, if you're 70½ or older, you can make a qualified charitable distribution (QCD) by transferring assets directly from your IRA to a qualified charity. A QCD can satisfy all or part of your RMD from your IRA, and you can exclude up to $111,000 of QCDs from your taxable income per taxpayer in 2026, which can help lower your tax bill.
• Or, when thinking about your legacy, consider using your RMD to cover life insurance costs. You can put this money into an irrevocable life insurance trust, which provides estate tax benefits and lets you avoid gift taxes.

How can you reduce future RMDs?

A few common strategies may help reduce future RMDs or delay when they must be taken.

• Convert assets to a Roth account. While taxes will apply on the converted amount, RMDs will not be required in the future.
• If you’re still working, roll assets subject to an RMD into your current employer plan. RMDs from your current employer plan are generally not required until April 1 after the year you retire.
• Take distributions before age 73 and/or take larger distributions in years you are in a lower tax bracket. Future RMDs will be lower, and you may be able to reduce your taxes.

Also, if you’re considering a rollover or conversion strategy, understand that you can’t roll or convert any RMDs in the year they’re due. In other words, you must distribute the RMD amount due that year.

How Edward Jones can help

RMD planning involves more than calculating a required withdrawal. An Edward Jones financial advisor can help you identify which accounts are subject to RMDs, plan for upcoming deadlines and arrange distributions or scheduled withdrawals for eligible accounts.

Importantly, your financial advisor can help you consider how an RMD fits with your other financial plans, including income and spending needs, charitable giving and legacy goals.

Talk with an Edward Jones financial advisor about building an RMD strategy that supports your retirement goals.

Frequently Asked Questions

How do I withdraw money from a retirement account, and who processes distributions?

You generally request a distribution through the financial institution or retirement plan administrator that holds your retirement account. Depending on the account and provider, you may be able to take a one-time withdrawal or establish scheduled payments.

What is a distribution from a retirement plan and which providers manage distributions?

A distribution is money withdrawn from a retirement account, such as an IRA or employer-sponsored plan. The financial institution, custodian or plan administrator that holds the account manages the distribution and provides the related tax reporting. For example, if Edward Jones holds your IRA, we will manage your distribution.

Who can help me set up required minimum distributions and scheduled withdrawals?

Your Edward Jones financial advisor can help you determine which accounts require RMDs, estimate the amounts and plan the timing. The institution or plan administrator holding the account can then process the RMD or establish scheduled withdrawals where available.

Which retirement plan providers offer automated distribution and RMD services?

Services vary by provider and account type. Some financial institutions and retirement plans offer recurring or scheduled distributions, while others require separate withdrawal requests. Ask the institution or plan administrator that holds your account which options are available and how it monitors RMD requirements.

What is a distribution from a retirement plan and when can you take it?

A distribution is a withdrawal from a retirement account. When you can take one depends on the account type and plan rules. Some withdrawals may be available before retirement, but taxes and penalties may apply. RMDs from certain accounts generally begin at age 73.