Required Minimum Distributions (RMD) Basics: RMD Age and Required Start Date (RBD)

As the workforce ages, and many federal employees are currently retiring—with many employees retiring within the next five to 10 years—questions about required minimum distributions (RMDs) are becoming prevalent.

In the first of four columns discussing RMDs, this column discusses the age of the RMD and the required beginning date (RBD).

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Relationship between RBD and lifetime RMDs

When a traditional IRA owner or a qualified retirement plan participant (including a Thrift Savings Plan participant) reaches a certain age or employment status, lifetime RMDs must begin. This age has been adjusted several times since 2019, as a result of the passage of the SECURE Act 1.0 and SECURE Act 2.0. The following table summarizes the RMD age by date of birth of an IRA owner or a qualified retirement plan participant:

The first RMD year is the calendar year in which an IRA owner reaches one of the ages listed in the table. The current RMD age is 73. There is no change when an individual traditional IRA owner turns 73 during the calendar year. It could be January 1, December 31, or any date in between. The first RMD can be taken anytime during the year the IRA owner turns 73. The first RMD—and only the first RMD—can be deferred until April 1 following the year in which the traditional IRA owner turns 73.

What is the purpose of the three-month delay in first-year traditional IRA RMDs? The delay is allowed for the first time IRA owner “to figure things out.” But there is a downside to deferring the first year’s RMD to the second year. The first year RMD must be received by April 1st of the second year and the second year must be received by December 31st of the second year. This means that two RMDs are taken in the same year. Both are taxable resulting in additional income and taxes during the second year. The following example illustrates:

Example 1. Jason owns a traditional IRA. Jason turned 73 on March 10, 2024. This means that Jason’s first RMD year is 2024. Jason can take his first RMD anytime during 2024, including the months before his birthday (January and short). He can take his first RMD between January 1 and March 31, 2025. However, if Jason delays his first RMD until early 2025, he will have to take two RMDs in 2025, and both will be taxable in 2025. All future RMDs must be taken by December 31.

What happens if the traditional IRA owner dies during the first year’s RMD but before their RBD

If a traditional IRA owner dies during the first year’s RMD and before his RBD, there is no RMD for the year of death. This is true even if the traditional IRA owner was over age 73 at the time of death. In Example 1, if Jason, who turned 73 in March 2024, were to die in March 2025, there is no RMD for 2024 or 2025 because he died before April 1, 2025.

Employer-sponsored retirement plan exemptions

There are no exceptions to the RMD rules for traditional IRA accounts, including traditional SEPs and SIMPLE IRAs. The RBD is always April 1 of the year the IRA owner turns 73. But there are exceptions to RMDs in qualified employer-sponsored retirement plans.

The RBD for participants in qualified retirement plans—this includes 401(k), 403(b), 457(b) retirement plans, and thrift savings plans—is the same on April 1 following the year in which a participant becomes 73, unless the plan participant qualifies for an exemption. If the plan participant is still working for the company sponsoring the retirement plan, or still in federal service in connection with the TSP, then the participant may defer RBD until April 1 following the year in which the participant retires or leaves the employer, or retires from federal service for TSP. The last year of employment will act the same as the first standard RMD year. That is, the year when the participant reaches the age of 73.

This is called the “still working” exemption for RBDs, but the exemption applies to RMDs only from employer-sponsored retirement plans such as the TSP. The exemption also does not apply if the individual does not currently work for the company. The following example illustrates:

Example 2. Patricia is a federal employee and will turn 73 in August 2024. Patricia owns a traditional IRA and contributes to the TSP. Patricia’s RBD for her traditional IRA is April 1, 2025. She must take her first RMD from her traditional IRA by that date. On the other hand, since the TSP offers the “still working” exception, Patricia can delay taking RMDs from the TSP until she retires from federal service. Particia’s RBD TSP will be April 1 of the year after she retires.

In connection with the TSP, the TSP allows TSP participants to directly roll over their traditional IRAs, including SEP IRAs and SIMPLE IRAs, into their traditional TSP account. If a TSP participant who has reached his or her TSP RBD makes such a direct rollover and the participant’s traditional IRA is then rolled into the traditional TSP account, then no traditional RMD should be taken of the IRA. The following example illustrates:

Example 3. The same facts as in Example 2, except that in December Patricia went online to her TSP account and requested a direct rollover of her entire traditional IRA to her traditional TSP. As of December 31, 2023, Patricia’s traditional IRA balance was $0. Therefore Patricia does not have to take her first traditional IRA RMD year.