What Is a Required Minimum Distribution?
A required minimum distribution (RMD) is the minimum amount the IRS requires your parent to withdraw from most retirement accounts each year once they reach a certain age. Right now, that age is 73.
The accounts that trigger RMDs include traditional IRAs, 401(k)s, 403(b)s, and most other tax-deferred retirement accounts. Roth IRAs are the main exception — they don’t require withdrawals during the owner’s lifetime.
The IRS calculates the minimum based on the account balance at the end of the previous year divided by a life expectancy factor. Your parent’s financial institution can usually do this math for them, but the responsibility to take the withdrawal falls on your parent.
Why RMDs Matter More Than People Expect
Missing an RMD used to trigger a 50% penalty on the amount not withdrawn. That penalty dropped to 25% under the SECURE 2.0 Act, and can fall to 10% if corrected quickly. But even at the lower rate, a missed withdrawal is a real and avoidable cost.
There’s also a tax planning angle. RMDs count as ordinary income. A larger-than-expected withdrawal can push your parent into a higher tax bracket, increase Medicare premiums, or affect how much of their Social Security is taxable. None of that is necessarily a crisis, but it’s worth knowing about in advance.
For a clear and current breakdown of the rules, the IRS RMD page on IRA withdrawals is the most reliable source.
How to Have This Conversation Without Making It Awkward
Most parents aren’t looking for their kids to take over. They want to feel supported, not managed. That’s an important starting point.
A few approaches that tend to work well:
- Ask questions instead of making statements. “Do you know if your accounts require withdrawals now?” lands better than “You need to take your RMD.”
- Connect it to something concrete. If your parent is turning 73, or recently retired, that’s a natural opening.
- Offer to sit with them, not for them. Reviewing account statements or calling a financial advisor together is very different from taking things over.
If you haven’t had a broader money conversation yet, talking to parents about finances has practical guidance on how to start.
What to Actually Look at Together
Once your parent is open to a conversation, there are a few things worth reviewing together each year.
- Confirm which accounts require RMDs. Not all retirement accounts have the same rules. Make a simple list.
- Check whether the RMD has been taken. Most brokerages will show this in year-to-date distribution history.
- Look at the deadline. RMDs generally need to be taken by December 31 each year. The first RMD ever has a grace period until April 1 of the following year, but taking two in one year can create a tax spike.
- Review how the withdrawal is being handled. Is it going to a checking account? Being reinvested in a taxable account? Being donated directly to charity through a qualified charitable distribution (QCD)?
- Make sure withholding is set up correctly. RMDs are taxable. If no taxes are being withheld, your parent may owe a bill at tax time.
One Option Worth Knowing: The Qualified Charitable Distribution
If your parent is charitably inclined, a QCD allows them to send up to $105,000 per year (in 2024) directly from an IRA to a qualified charity. The withdrawal counts toward the RMD but doesn’t count as taxable income. For parents who don’t need the money and give regularly anyway, this is often a smart move.
It won’t be right for everyone, but it’s a useful option to put on the table when you’re reviewing things together.
What Happens When Accounts Get Complicated
Sometimes parents have multiple IRAs, an old 401(k) from a former employer, or inherited accounts from a spouse. The rules can vary between account types, and RMDs from inherited IRAs follow a different schedule entirely.
If the accounts have gotten complicated, it’s worth connecting your parent with a fee-only financial advisor or a CPA who specializes in retirement income. Helping your parent make that appointment — rather than trying to work it all out yourselves — is often the most useful thing you can do.
While you’re looking at the broader financial picture, it’s also a good moment to catch any auto-renewals after retirement that may no longer make sense, especially if RMD income is being redirected into a checking account.
Ask Felix can help you and your parent stay on top of account activity throughout the year, so nothing slips through the cracks when it matters most.
Frequently Asked Questions
Q: What happens if my parent misses an RMD?
The IRS can charge a penalty of up to 25% of the amount that should have been withdrawn. If the mistake is caught and corrected quickly — within two years — the penalty drops to 10%. The IRS also has a correction process, so a missed RMD is fixable, but it’s better to avoid it in the first place.
Q: Do inherited IRAs have the same RMD rules?
No. Inherited IRAs follow different rules depending on the relationship to the original owner and when the account was inherited. Most non-spouse beneficiaries are now required to empty the account within 10 years. A financial advisor or CPA can clarify what applies to your parent’s specific situation.
Q: Can my parent take more than the required minimum?
Yes. The RMD is a floor, not a ceiling. Your parent can withdraw as much as they want. The only consideration is that all withdrawals from traditional accounts count as ordinary income, so larger withdrawals may have tax implications worth planning around.