Required minimum distribution

What it means

Required minimum distributions apply to most tax-deferred retirement accounts once the account holder reaches the age set by federal law.

They also apply after a death, on rules that depend on who inherited and when. The rules changed substantially in recent years and older guidance is often wrong.

The penalty for missing one is a percentage of the amount that should have been taken, and it can usually be reduced if corrected promptly.

Why it matters

A distribution due in the year of death is still due, and the beneficiary usually has to take it. Nobody sends a reminder to an estate.

It is also the point where inheriting a retirement account becomes a tax question rather than a paperwork question, and the answers changed recently enough that a well-meaning relative's advice is likely out of date.

When you are likely to meet it

• In the year a retirement account holder dies.
• When inheriting an IRA or a workplace plan.
• When a plan administrator asks about a distribution schedule.

Related terms

• Annuity death benefitWhat an annuity pays when the owner dies — which depends entirely on the contract and its phase.
• Beneficiary designationA named person on an account or policy who receives it directly on death, without it passing through the will or probate.
• Designated beneficiaryThe person actually named on an account or policy. In the retirement-account rules it is also a narrower term, and an estate does not qualify as one.
• ERISAThe federal law governing most employer retirement and benefit plans. It is the reason a plan's own beneficiary form usually beats a will or a state law.
• Fiduciary returnThe income tax return an estate or trust files for money it earns after the death.
• Income in respect of a decedentIncome the person had earned but not received when they died, taxed to whoever receives it.
• Inherited IRAA retirement account received from somebody who died, held under rules that differ from an account you opened yourself.
• Qualified domestic relations orderA court order dividing a workplace retirement plan between spouses after a divorce, which the plan must be given in order to act.
• Survivor annuityA continuing pension payment to a surviving spouse, if that option was chosen when the pension started.
• Thrift Savings PlanThe retirement savings plan for federal employees and members of the uniformed services.

Official sources

The authority this page describes, at the agency that publishes it. Sahvelo does not restate a rule from a secondary source.

• IRS — required minimum distributions (opens in a new tab)

Sahvelo guidance that uses this

• Retirement accounts