If you’ve been navigating the world of retirement savings, you’ve probably heard the term “Required Minimum Distribution” (RMD) thrown around. It’s one of those IRS rules that can sneak up on you as you hit your golden years. Today, I’m diving into the essentials: when you need to start taking these distributions, how to calculate the amount, and the key differences between handling RMDs from a traditional IRA versus the Thrift Savings Plan (TSP) for federal employees. After covering the rules, we’ll tackle planning considerations and common questions to keep you ahead of the game. Let’s break it down.

When Do You Need to Start Taking RMDs?

The starting age for RMDs has evolved thanks to the SECURE 2.0 Act, which gives people more flexibility in retirement planning. As of 2025, the general rule is that you must begin taking RMDs from your retirement accounts by age 73. But it depends on when you were born:

• Born before January 1, 1951? Your RMDs started at age 72.
• Born between 1951 and 1959? It’s age 73.
• Born in 1960 or later? You’ve got until age 75.

This milestone is called your Required Beginning Date (RBD). Your first RMD is due by April 1 of the year following the one in which you hit that age. For example, if you turn 73 in 2025, your first distribution (based on your 2024 year-end balance) is due by April 1, 2026. After that, you’ll need to take RMDs annually by December 31. Miss the deadline, and you’re facing a penalty—more on that later.

Exception: If you’re still working and participating in an employer-sponsored plan (like a 401(k) or the TSP) and don’t own 5% or more of the business, you can delay RMDs until you retire. This doesn’t apply to IRAs—you must start at your RBD, regardless of employment status.

How Much Do You Need to Withdraw?

Calculating your RMD isn’t rocket science, but it requires basic math and the right IRS tables. Here’s the step-by-step:

1. Grab Your Account Balance: Use the value of your account as of December 31 of the previous year. For 2025, look at December 31, 2024.
2. Find Your Life Expectancy Factor: The IRS provides tables in Publication 590-B to determine your “distribution period.” Most folks use the Uniform Lifetime Table (Table III), which estimates your remaining lifespan based on age. For example, at age 73, the factor is 26.5 years; at 75, it’s 24.6.
   • If your spouse is your sole beneficiary and more than 10 years younger, use the Joint Life and Last Survivor Table (Table II) for a potentially lower RMD.
   • Beneficiaries of inherited accounts use the Single Life Expectancy Table (Table I).
3. Do the Division: Your RMD = Account Balance ÷ Life Expectancy Factor. For example, if you’re 75 with a $450,000 balance and a factor of 24.6, your RMD is about $18,293 ($450,000 ÷ 24.6).

You can always withdraw more than the RMD—extra withdrawals don’t carry over to future years, though. Fail to take enough, and the IRS slaps a 25% excise tax on the shortfall, though it drops to 10% if corrected within two years. Reasonable errors might be waived if you file Form 5329 and explain yourself. Many custodians (like Schwab for IRAs or TSP administrators) calculate this for you, but always double-check.

Key Differences Between RMDs from IRAs and the Thrift Savings Plan (TSP)

While the core RMD rules come from the IRS and apply broadly, there are some notable tweaks when comparing traditional IRAs to the TSP. Here’s how they differ:

• Starting Age and Deferral Options: IRAs require RMDs at your RBD (73 or 75, based on birth year), no exceptions, even if you’re working. For TSP, if you’re still employed by the federal government and not separated from service, you can delay RMDs until retirement.
• Aggregation of Accounts: With multiple IRAs, calculate the RMD for each separately, but you can combine the total and withdraw it from one IRA (or split it as you like). TSP is different—you must calculate and take its RMD directly from the TSP account. You can’t use an IRA withdrawal to satisfy a TSP RMD, or vice versa.
• Handling Roth Portions: Thanks to SECURE 2.0, starting in 2024, Roth balances in both IRAs and TSP are exempt from lifetime RMDs. Your RMD calculation only includes the traditional (pre-tax) portion, which can lower your required withdrawal if you have a significant Roth balance.
• Automatic Distributions and Rollovers: The TSP automatically calculates your RMD and sends it if you haven’t withdrawn by the deadline (typically November). IRAs don’t usually do this—it’s on you or your custodian to initiate. TSP RMDs can’t be rolled over into another retirement account such as an IRA—they’re taxable distributions. For IRAs, non-RMD withdrawals can sometimes be rolled over, but RMDs themselves cannot.
• Penalties and Corrections: Penalties are identical (25% excise tax, reducible to 10%).

In short, IRAs offer more flexibility for withdrawals, while TSP is more structured. Federal employees with both need to plan carefully to avoid penalties.

Planning Issues for Federal Retirees and Common RMD Questions

Now that we’ve covered the rules, let’s address planning considerations and common questions as you approach your RBD.

Timing Your First RMD

You can wait until April 1 of the year after turning 73, but that doesn’t mean you should. If you need the income in the year you turn 73, take it then. Otherwise, timing depends on taxes. Taking the RMD in a year with lower income could keep you in a lower tax bracket, saving you money.

Losing Some Control at Your RBD

Once you hit your RBD, your joint owner (Uncle Sam) of your IRAs and TSP is going to force you to take distributions. For retirees who need the income, this isn’t an issue. But if you don’t need the funds, waiting until you’re forced to withdraw isn’t always the best move. Taking distributions before age 73 or doing annual Roth conversions could offer benefits like:

• Tax savings over your lifetime
• Lower future RMDs
• More wealth passed to beneficiaries
• Greater control over future taxable income

Letting investments grow is great, but tax-deferred accounts might not be the best place for that growth. Check out this video for more details. Doing conversions earlier in retirement could be beneficial later on.

Can I Roll Over My RMD?

No, RMDs cannot be rolled over or transferred to another IRA.

Can I Convert My RMD to a Roth IRA?

Negative -you can convert funds above your RMD amount, but the RMD itself cannot be converted.

Qualified Charitable Distributions (QCDs)

QCDs are a fantastic way to use RMDs and potentially reduce future ones. Starting at age 70½, you can make a Qualified Charitable Distribution by writing a check from your IRA directly to a qualifying charity. Benefits include:

• No taxes on the distribution
• Reduced IRA balance
• Satisfying your RMD
• Tax advantages for charitable giving, even if you take the standard deduction

Note: QCDs aren’t allowed from TSP accounts.

What if I’m Still Working and I Don’t Want to Take RMDs?

If you have passed your Required Beginning Date (RBD) and are still working, you can avoid RMDs by rolling your IRA funds into your current employer’s 401(k) or TSP. This allows you to delay RMDs until you retire.

There you have it—RMDs demystified. While Uncle Sam will eventually get his money, there are steps that you can take to minimize your tax hit depending on what your goals are. If you need help planning for your RMDs you are welcome to schedule an initial call.