Are 401(k)s Subject to RMDs? Rules, Exceptions, and Penalties

Yes, traditional 401(k) accounts are subject to required minimum distributions (RMDs). Once you hit the triggering age set by the IRS, you have to start pulling money out of a tax-deferred 401(k) each year whether you need it or not. That age is 73 for people born between 1951 and 1959, and 75 for anyone born in 1960 or later.¹ Roth 401(k)s are a different story, and if you’re still working there’s an exception that can push the start date out further.

When Your RMDs Start

Your triggering age depends entirely on your birth year. SECURE Act 2.0 moved the age back in two stages:

Born 1951 through 1959: RMDs begin at age 73.
Born 1960 or later: RMDs begin at age 75. The earliest first RMD for anyone in this group falls in 2035.¹

The boundary is sharp. Someone born in December 1959 hits their first RMD year in 2032 at age 73. Someone born one month later, in January 1960, doesn’t reach a first RMD until 2035 at age 75. Getting the year wrong means either a surprise tax bill or an avoidable penalty.

Roth 401(k)s Are Exempt During Your Lifetime

Starting with the 2024 tax year, Roth 401(k) accounts are no longer subject to RMDs while the account owner is alive.² Before SECURE Act 2.0, Roth 401(k) holders had to take distributions on the same schedule as traditional 401(k) holders even though the money had already been taxed. The old workaround was rolling the Roth 401(k) into a Roth IRA, which was always exempt. That rollover is no longer needed just to escape forced withdrawals.

One wrinkle: any RMDs required for 2023 or earlier still had to be taken under the old rules, even if the check was issued in 2024. The exemption only covers the 2024 tax year forward. After the account owner dies, distributions to Roth 401(k) beneficiaries follow the inherited-account rules.

The Still-Working Exception

If you’re past your RMD age but still on the payroll, you can often delay distributions from your current employer’s 401(k) until April 1 of the year after you actually retire.² Three conditions trip people up:

Your plan must permit it. The exception isn’t automatic. The plan document has to specifically allow participants to delay RMDs while still employed. Most large plans do, but confirm with your plan administrator.³
You can’t own more than 5% of the business. Owning more than 5% of the company’s stock, voting power, or profits interest disqualifies you, and you take RMDs on the standard age schedule regardless of your employment status.⁴
It only covers the current plan. Any 401(k) balances sitting with former employers still fall under the normal age-based rules.²

If your current plan accepts incoming rollovers, moving old 401(k) or IRA balances into the active plan puts that money under the same still-working shield. Not every plan accepts rollovers, so check before you initiate one.

How the RMD Is Calculated

The math is simpler than it looks. Take your 401(k) balance as of December 31 of the prior year and divide by a life expectancy factor from the IRS Uniform Lifetime Table.⁵ The result is that year’s RMD.

At age 73 the factor is 26.5. At 75 it’s 24.6.⁶ A $500,000 balance at age 73 produces an RMD of roughly $18,868. The same balance at 75 produces about $20,325. The divisor shrinks each year, so the required withdrawal grows proportionally as you age.

One exception to the table: if your sole beneficiary is a spouse more than 10 years younger than you, you use the Joint Life and Last Survivor Expectancy Table, which produces a larger divisor and a smaller required withdrawal.⁶

Multiple 401(k)s Don’t Combine

If you have 401(k)s scattered across several former employers, you cannot pool them for RMD purposes. Each plan’s RMD has to be calculated separately and withdrawn from that specific plan.⁷ Taking a larger distribution from one plan does not satisfy another plan’s obligation.

This is the opposite of the IRA rule. With multiple IRAs, you calculate each account’s RMD but can pull the total from any single IRA or combination.⁷ For anyone with three or four old plans, that’s a good reason to consolidate before RMD age.

Deadlines and the Double-Distribution Trap

Your first RMD is due by April 1 of the year after you reach the triggering age (or the year after you retire, if the still-working exception applies). Every RMD after that is due December 31.²

The April 1 grace period looks generous, but it has a well-known catch. Delay the first RMD to March of the following year and you still owe your second RMD by December 31 of that same year, so two taxable distributions land on one return.³ Depending on the amounts, doubling up can push you into a higher bracket, raise Medicare premiums through IRMAA surcharges, or make more of your Social Security taxable. Most people are better off taking the first distribution in the year they turn 73 or 75 rather than deferring to April.

Penalty for a Missed RMD

The excise tax for failing to take a required distribution is 25% of the shortfall.⁸ On a $20,000 missed RMD, that’s a $5,000 penalty, plus the income tax you’ll still owe on the distribution when you eventually take it.

The rate drops to 10% if you correct the mistake within a window that runs through the end of the second tax year after the year the penalty was imposed. You need to withdraw the missed amount and file a return reflecting the corrected tax during that window.⁸

If the missed RMD was due to reasonable error rather than willful neglect, the IRS can waive the excise tax entirely. File Form 5329 with a written explanation showing the shortfall came from reasonable error and that you’ve fixed it.⁹ Common grounds include serious illness during the distribution year, a plan-custodian error, or bad advice from a financial professional. On the form, enter “RC” and the waiver amount in parentheses on the dotted line next to line 54, and attach your explanation. Waivers aren’t guaranteed, but the IRS approves them fairly often when the error is clearly unintentional and the missed amount has already been taken.

Inherited 401(k)s Follow Different Rules

If you inherit a 401(k), the RMD rules discussed above don’t apply the same way. What you owe depends on your relationship to the deceased and, for non-spouse beneficiaries, on whether the account owner had already started RMDs at death. The IRS finalized additional regulations for distributions in 2025 and beyond.¹⁰

A surviving spouse has the most flexibility and can generally roll the inherited account into their own IRA or 401(k), resetting the RMD clock to their own age schedule.¹¹

Most non-spouse beneficiaries who inherited a 401(k) in 2020 or later must empty the entire account by the end of the 10th year after the account owner’s death.² Whether you also owe annual distributions during that 10-year window depends on timing. If the owner died after their required beginning date, the IRS final regulations require annual distributions throughout the 10 years, with the account fully drained by year 10.¹⁰ If the owner died before reaching RMD age, no annual withdrawals are required during the 10 years, but the account still has to be empty by the deadline.

A narrow group of non-spouse beneficiaries can still stretch distributions over their own life expectancy: a minor child of the account owner (until majority), someone disabled or chronically ill, and anyone not more than 10 years younger than the deceased.¹¹ The specific options available depend on the plan, so contact the plan administrator soon after the account owner’s death.

1
Pension Benefit Guaranty Corporation. Required Beginning Date
2
Internal Revenue Service. Retirement Plan and IRA Required Minimum Distributions FAQs
3
Internal Revenue Service. IRS Reminds Retirees: April 1 Final Day to Begin Required Withdrawals From IRAs and 401(k)s
4
Legal Information Institute. 26 USC 416(i)(1) – Definition: 5-Percent Owner
5
Internal Revenue Service. Retirement Topics – Required Minimum Distributions (RMDs)
6
Internal Revenue Service. Publication 590-B (2025), Distributions From Individual Retirement Arrangements (IRAs)
7
Internal Revenue Service. RMD Comparison Chart (IRAs vs. Defined Contribution Plans)
8
Office of the Law Revision Counsel. 26 USC 4974 – Excise Tax on Certain Accumulations in Qualified Retirement Plans
9
Internal Revenue Service. Instructions for Form 5329 (2025) – Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts
10
Federal Register. Required Minimum Distributions
11
Internal Revenue Service. Retirement Topics – Beneficiary