Understanding RMD: What Is Required Minimum Distribution on a $250,000 Retirement Account?

If you have a tax-deferred retirement account such as a traditional IRA or 401(k), you face an important requirement once you reach a certain age: you must take out a minimum amount of money annually. This mandatory withdrawal is known as a Required Minimum Distribution, or RMD. For 2026, if you turn 73 and have $250,000 in a traditional IRA, your RMD would equal $9,434. Understanding how RMDs work is crucial for managing your retirement income and avoiding substantial tax penalties.

What Exactly Is an RMD and Why Does It Matter?

An RMD is the smallest amount you must withdraw from specific types of tax-deferred retirement accounts each year once you reach the qualifying age. The government imposes this requirement because these accounts were designed to encourage retirement savings through tax deferral. However, the IRS wants to ensure that account holders eventually pay taxes on these accumulated funds rather than leaving them invested indefinitely.

Tax-deferred accounts allow you to contribute pre-tax dollars today and postpone paying income taxes on both your contributions and investment gains until withdrawal. This is an attractive feature for building retirement wealth, but it comes with a catch: you cannot delay paying taxes forever. The IRS established RMD rules to ensure that retirement accounts are actually used for retirement income, not as permanent wealth-transfer vehicles for future generations.

Failing to take your RMD on schedule triggers a severe financial consequence. The IRS imposes an additional 25% excise tax on the amount you failed to withdraw—meaning you owe one-quarter of the shortfall to the government while still being required to eventually withdraw the full RMD. Though this penalty can be reduced to 10% if you correct the error within two years, or waived entirely if the shortfall resulted from a reasonable error and you fix it promptly with proper documentation filed via Form 5329.

Which Retirement Accounts Require Minimum Distributions?

Not all retirement accounts are subject to RMD rules. The requirement applies to traditional retirement account holders and their beneficiaries in the following account types:

• Traditional IRAs
• SEP IRAs (Simplified Employee Pensions)
• SIMPLE IRAs
• Traditional 401(k) plans
• Traditional 403(b) plans
• 457(b) plans (government and nonprofit employer plans)

An important distinction: Roth accounts operate differently. While you are the original account holder, Roth IRAs and Roth 401(k)s are exempt from RMD requirements. This tax-free growth feature makes Roth accounts particularly attractive for those seeking to leave funds untouched. However, beneficiaries who inherit Roth accounts must follow RMD rules, though they enjoy the advantage of tax-free withdrawals.

RMD withdrawals must be completed by December 31 each year. There is one exception: your very first RMD can be delayed until April 1 of the following year. However, if you delay your first RMD until April 1, your second RMD must still be taken by December 31 of that same year, creating a potentially compressed timeline.

RMD Age Requirements: When Do You Need to Start?

The age at which you begin RMDs has shifted over recent years due to legislative changes. The Secure Act of 2019 and the Secure Act 2.0 of 2022 gradually increased the starting age, phasing it in based on birth dates.

Here is the current schedule:

As of 2026, if you were born between January 1, 1951, and December 31, 1959, you must begin taking RMDs at age 73. If you were born after 1959, the requirement doesn’t begin until age 75. Understanding which age threshold applies to you is the first step in calculating your annual RMD.

How to Calculate Your RMD on $250,000 and Other Amounts

Determining your RMD involves a straightforward two-step process. First, you identify your account balance as of December 31 of the prior calendar year. Second, you divide that balance by a life expectancy factor from an IRS table designed for your current age.

The IRS publishes three different life expectancy tables depending on your specific circumstances:

Table I (Single Life Expectancy) is used by beneficiaries of retirement accounts.

Table II (Joint and Last Survivor Life Expectancy) applies to account holders whose sole beneficiary is a spouse more than 10 years younger.

Table III (Uniform Lifetime) is used by most account holders—those with a spouse not more than 10 years younger, multiple beneficiaries, or no designated beneficiary.

For individuals with multiple IRAs, you calculate the RMD separately for each account, but you have flexibility in how you take the money: you can withdraw the total combined RMD from one account or split it among them. This flexibility does not extend to 401(k)s, 403(b)s, and profit-sharing plans, where each account requires a separate calculation and separate withdrawal.

Below is an excerpt from the IRS Uniform Lifetime Table (Table III):

Calculation Example 1: Suppose you turn 73 in 2026 and hold a traditional IRA with a December 31, 2025, balance of $250,000. Using the table above, the distribution period for age 73 is 26.5. Your 2026 RMD equals $250,000 divided by 26.5, which equals $9,434. Since this is your first RMD, you may delay the actual withdrawal until April 1, 2027. However, all subsequent RMDs must be taken by December 31 annually.

Calculation Example 2: Imagine you turn 74 in 2026 and own two traditional IRAs. The first contains $250,000 and the second contains $500,000 as of December 31, 2025. Using the distribution period of 25.5 for age 74, your RMD on the first account is $9,804 and on the second account is $19,608. The combined RMD totals $29,412. You could withdraw this entire sum from one account, or split the withdrawal between the two—the choice is yours.

Calculation Example 3: Consider you turn 77 in 2026 and have both a traditional IRA and a traditional 401(k), each with a December 31, 2025, balance of $250,000. The distribution period for age 77 is 22.9. The RMD for each account is $10,918 (that is, $250,000 divided by 22.9). Unlike the IRA situation, you must calculate and withdraw the RMD separately from each account. You cannot combine the amounts and withdraw from just one account.

Managing RMD Withdrawals Strategically

Once you understand the mechanics of calculating your RMD, consider how it integrates with your broader retirement income plan. Some retirees find that their RMD exceeds their spending needs in a given year, creating opportunities for strategic giving or reinvestment of the after-tax proceeds. Others may find that RMD withdrawals push them into a higher tax bracket, making it worthwhile to consult with a tax professional about timing or other tax-mitigation strategies.

For those with multiple retirement accounts, the ability to aggregate RMD calculations from IRAs while taking separate withdrawals from employer plans offers important flexibility. You might choose to concentrate withdrawals during certain years or spread them throughout the year to manage tax consequences.

Key Takeaways About RMDs

RMD requirements represent an essential component of retirement account management. Once you reach your RMD age—whether 73, 75, or another age depending on your birth date—you must withdraw at least the calculated minimum amount from your tax-deferred accounts annually. For a 73-year-old with $250,000 in a traditional IRA, the 2026 RMD calculates to $9,434 using the IRS Uniform Lifetime Table.

Understanding the calculation method, knowing which accounts are subject to RMD rules, and meeting the December 31 deadline help you avoid penalties and keep your retirement strategy on track. Whether you have one account or several, and whether your RMD is $9,434 or significantly larger, ensuring timely and accurate withdrawals protects your retirement income plan and maintains good standing with the IRS.