Your RMD Withdrawal Checklist: What You Need to Know Before Taking Money Out

If you're 73 or older and have a traditional IRA, SEP-IRA, or SIMPLE IRA, the IRS requires you to take Required Minimum Distributions (RMDs) each year. Missing this deadline carries a steep penalty, so understanding the rules before you withdraw is essential. 📋

This checklist walks you through the key decisions and steps that apply to most people taking RMDs—and the variables that might change what you need to do.

What Is an RMD?

An RMD is the minimum amount of money the IRS requires you to withdraw from certain retirement accounts each year. The IRS calculates this amount using your account balance, your age, and IRS life-expectancy tables.

Why does the IRS require this? These accounts were designed to fund retirement, not to serve as tax-deferred estates. RMDs ensure the government eventually collects income tax on that money.

The RMD rules changed in 2023: the age at which withdrawals become mandatory increased from 72 to 73. If you turned 72 before January 1, 2023, the old rules still apply to you. Know your own birth year and the rules in effect for your situation.

Key Variables That Shape Your RMD

Your RMD amount and strategy depend on several factors:

The RMD Withdrawal Checklist 📋

Before You Withdraw

1. Confirm your RMD start year

• Check your birth date against the current rule (age 73, starting in 2023—or age 72 if you turned 72 before January 1, 2023).
• If this is your first RMD year, you have until April 1 of the following year to take it. After that, all RMDs are due by December 31 each year.

2. Calculate or verify your RMD amount

• The IRS provides worksheets and tables on its website to help you calculate this.
• Your custodian (bank, brokerage, or financial institution) is required to calculate and inform you of your RMD, but verify it yourself.
• If you have multiple IRAs, calculate each one, then add them together for the total RMD you must take from those accounts.

3. Know what accounts count together and which don't

• You can aggregate RMDs across all traditional IRAs, SEP-IRAs, and SIMPLE IRAs—meaning you can take the total RMD from whichever accounts you choose.
• RMDs from 401(k)s, 403(b)s, and other employer-sponsored plans must be taken separately from each account.
• Roth IRAs are exempt (unless they're inherited).

4. Decide your withdrawal strategy

• Full amount at once? Some people withdraw the entire RMD in January and invest or spend it as needed.
• Spread across the year? You can take smaller amounts monthly or quarterly, but the total must meet your RMD by year-end.
• From which accounts? If you have multiple IRAs, you can choose which ones to withdraw from (as long as the total meets your RMD).

During the Withdrawal

5. Confirm the withdrawal request specifies an RMD

• When you request the withdrawal, clearly label it as an RMD.
• This helps your custodian track it correctly for tax reporting.
• Some custodians have specific forms or checkboxes for RMD requests.

6. Understand the tax withholding

• RMDs are taxed as ordinary income in the year they're withdrawn.
• Your custodian will withhold federal income tax (typically 10–20%, depending on your setup), but this may not cover your total tax liability.
• You can request additional withholding if you expect to owe more at tax time.
• If you prefer, you can arrange to have no withholding and pay the tax yourself quarterly, though this requires discipline.

7. Request a direct transfer if moving funds

• If you want to move the withdrawn amount to another institution, ask for a direct trustee-to-trustee transfer.
• This avoids the 60-day rollover rule and simplifies record-keeping.

After the Withdrawal

8. Verify it was reported correctly

• Your custodian will issue a Form 1099-R by January 31 showing the RMD withdrawal.
• Make sure the code on the 1099-R indicates it's an RMD distribution (not all withdrawals are coded the same).
• Keep this document for your tax return.

9. Report it on your tax return

• Report the RMD amount on your federal income tax return (the exact line depends on your tax software or return form).
• The income is taxable unless the funds came from a source that was already taxed (rare for most RMDs).

10. Mark your calendar for next year

• RMDs are an annual obligation.
• Set a reminder for early in the following year (or by April 1 if it's your first RMD) so you don't miss the deadline.

Common Situations That Change the Checklist

You have a much younger spouse

• If your spouse is your sole beneficiary and is more than 10 years younger than you, you may qualify for a lower RMD using the Joint and Survivor Life Expectancy Table. Verify this with your custodian or tax advisor.

You're still working

• The Still-Working Exception may allow you to delay RMDs from a 401(k) or 403(b) at your current employer if you're still employed there and don't own more than 5% of the company. This does not apply to IRAs.

You have inherited retirement accounts

• Inherited IRAs and retirement accounts have different RMD rules than your own accounts. The timeline and calculation depend on when the original account owner died and your relationship to them.

You want to donate to charity

• If you're charitably inclined, a Qualified Charitable Distribution (QCD) allows you to direct up to $100,000 per year (adjusted annually for inflation) directly from your IRA to a qualified charity. This counts toward your RMD but isn't taxed as income to you.

What Happens If You Miss the Deadline

The penalty for missing an RMD is steep: 10% of the amount you failed to withdraw (reduced from 25% in certain circumstances, depending on when the error is caught and corrected). This is on top of the regular income tax you'll owe on the withdrawn amount.

If you realize you missed a deadline, you can sometimes correct it by taking the RMD plus the penalty, but filing Form 5329 with the IRS or requesting a waiver may reduce or eliminate the penalty if you have a reasonable explanation. Don't delay if this happens.

Bottom Line

Your RMD is non-negotiable if you meet the age and account requirements. The checklist above covers the standard path for most account owners—but your specific situation (account types, beneficiaries, employment status, tax bracket, charitable giving goals) may require adjustments.

Work through each step, keep documentation, and if anything feels unclear—especially related to your tax liability or inherited accounts—consult a tax professional or financial advisor who can review your complete picture. A small amount of planning now prevents a costly mistake later. ✓