Required minimum distributions (RMDs) from retirement accounts like 401(k)s are mandated by the IRS to help ensure retirement savings are used during your lifetime. RMDs begin once you reach age 72 (or 73 if you reach age 59½ after December 31, 2032). The amount you need to withdraw each year is based on your account balance at the end of the previous year, and the IRS provides a formula for calculating this amount. Failing to take RMDs on time can result in a penalty, so it’s important to understand and follow the rules to avoid potential tax consequences.
When Do You Have to Take 401k Distributions?
Taking money out of your 401(k) account is an important financial decision. You need to know the rules so you can avoid penalties and make the most of your retirement savings.
Age 72: Required Minimum Distributions Begin
Once you reach age 72, you are required to start taking money out of your 401(k) account using required minimum distributions. These distributions are based on your life expectancy and the value of your account.
 The amount of your required minimum distribution is calculated using a formula provided by the IRS.
 You must take your required minimum distribution by December 31st of each year.
 If you fail to take your required minimum distribution, you may be subject to a penalty of 50% of the amount you should have taken.
Age  Life Expectancy  Required Minimum Distribution Factor 

72  27.4  0.0365 
73  26.5  0.0377 
74  25.6  0.0390 
75  24.7  0.0404 
The table above shows the life expectancy and required minimum distribution factor for different ages. To calculate your required minimum distribution, divide the value of your account by the required minimum distribution factor.
Required Distribution Calculations: RMD
If you have a 401(k) or other retirement account, you’ll eventually reach the age when you’re required to start taking money out of the account. This is known as a required minimum distribution, or RMD.
The RMD rules are designed to ensure that you don’t leave too much money in your retirement account and that you start taking money out at a time when you need it. The RMD rules apply to all traditional IRAs, SEP IRAs, and SIMPLE IRAs. They also apply to 401(k)s, 403(b)s, and 457 plans.
The RMD rules are based on your age and the value of your retirement account. The older you are, the larger the percentage of your account you’ll be required to take out each year. The table below shows the RMD percentages for different ages:
Age  RMD Percentage 

72  3.65% 
73  4.00% 
74  4.35% 
75  4.70% 
76  5.05% 
77  5.40% 
78  5.75% 
79  6.10% 
80  6.45% 
81  6.80% 
82  7.15% 
83  7.50% 
84  7.85% 
85  8.20% 
86  8.55% 
87  8.90% 
88  9.25% 
89  9.60% 
90  9.95% 
91  10.30% 
92  10.65% 
93  11.00% 
94  11.35% 
95  11.70% 
96+  12.05% 
 The RMD is calculated by dividing the account balance as of December 31 of the previous year by the RMD percentage for your age. For example, if you have a $500,000 account balance and you’re 72 years old, your RMD for the year will be $18,250 (500,000 / 3.65%).
 You must take your RMD by December 31 of each year. If you don’t take your RMD by the deadline, you’ll be subject to a penalty of 50% of the amount that you should have taken out.
There are some exceptions to the RMD rules. For example, you don’t have to take an RMD if you’re still working and your employer is contributing to your retirement account. You also don’t have to take an RMD if you’re disabled or if you inherit a retirement account from someone who died before reaching age 72.
If you have any questions about the RMD rules, you should contact the IRS or a financial advisor.
When to Take Required Minimum Distributions (RMDs) from Your 401(k)
Understanding when you must start taking Required Minimum Distributions (RMDs) from your 401(k) is crucial to avoid potential tax penalties. RMDs are a set amount of money that you must withdraw each year from your 401(k) account once you reach age 72. If you fail to take the required minimum distribution, you could face a 50% penalty on the amount you should have withdrawn.
The age at which you must start taking RMDs has changed over the years. For those who turned 70½ before January 1, 2020, the RMD age was 70½. However, the SECURE Act of 2019 raised the RMD age to 72 for those who turn 70½ after December 31, 2019.
Rollovers and Taxable Events

Roth 401(k) Rollovers: When you roll over funds from a traditional 401(k) to a Roth 401(k), you are not subject to RMDs during your lifetime. However, the withdrawals from the Roth 401(k) in retirement are taxed as ordinary income.

401(k) to IRA Rollovers: If you roll over your 401(k) to a traditional IRA, the RMD rules remain the same. You must start taking RMDs from your IRA once you reach age 72.

401(k) Withdrawals: When you withdraw funds from your 401(k) before age 59½, you may face a 10% early withdrawal penalty in addition to income taxes.

Inherited 401(k)s: If you inherit a 401(k), you must follow different RMD rules. Spouses can treat the inherited 401(k) as their own, while nonspouse beneficiaries must withdraw the entire balance within 10 years.
RMD Table
The following table summarizes the RMD rules based on your age:
Age  RMD Percentage 

72  3.65% 
73  4.16% 
74  4.57% 
75  5.03% 
76  5.49% 
77  5.94% 
78  6.39% 
79  6.84% 
80  7.30% 
When You Must Take 401(k) Distributions
Individuals who participate in a 401(k) plan are required to start taking distributions (withdrawals) from their account once they reach a certain age. These distributions are known as Required Minimum Distributions (RMDs) and must be taken annually. Failure to take RMDs can result in significant penalties.
Age Requirements
Generally, RMDs must begin in the year after you turn 72. However, there are some exceptions for:
 Individuals who still work for the employer sponsoring the 401(k) plan
 Owners of businesses with 5% ownership or more
In these cases, RMDs may be delayed until the individual retires or terminates employment (up to age 75).
Calculating RMDs
The amount of your RMD is determined by a formula that considers your account balance and life expectancy. The Internal Revenue Service (IRS) provides a Uniform Lifetime Table to assist with these calculations.
Penalties for NonCompliance
Failure to take RMDs by the deadline can result in a penalty of 50% of the amount that should have been withdrawn. This penalty is applied each year that an RMD is missed.
Additional Information
Age  Distribution Requirement 

Before 59.5  Withdrawals may be subject to a 10% early withdrawal penalty 
59.5 – 72  Withdrawals can be taken without penalty 
72+  Must take annual RMDs 
It is important to note that RMDs are mandatory and cannot be avoided. If you are unsure about the amount of your RMD or the deadline for taking it, it is advisable to consult with a financial advisor or the IRS.
Well, that’s a wrap! I hope this article gave you a good idea of when you need to take your 401(k) distributions. Remember, it’s all about meeting your needs while following the rules. If you have any more questions or want to dive deeper into the topic, feel free to swing by again. I’ll be here, ready to lend a helping hand. Thanks for reading, folks!