A Required Minimum Distribution (RMD) is the amount of money that you must withdrawal from your Qualified Retirement Accounts every year, beginning in the year that you turn 72.
Qualified accounts to be included in the RMD calculations are IRAs, 401(k) plans, 403(b) plans, 457 plans, profit sharing plans and qualified defined contribution plans.
Note: Roth IRAs and Roth 401(k)s are not included in RMD calculations.
The amount of the distribution changes annually, as it is calculated by dividing the balance of all your tax deferred assets as of December 31st of the previous year, by an age-based factor determined by the IRS.
There are some special situations that allow you to defer certain RMDs, but generally they must be taken at the mandated time or you risk paying a penalty equal to 50% of the amount that should have been taken.
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