No Joke - Today is a Required Beginning Date!
Today is April 1, and that’s a big day! No, not because it’s April Fool’s Day, but because today is the required beginning date (RBD) for any traditional IRA owner who turned age 73 in 2025. Based on census data, that could be a few million Americans.
What is the RBD?
It is the day when required minimum distributions (RMDs) are officially “turned on” within a traditional IRA. Regarding the RBD on company plans, older employees who do not own more than 5% of the business and whose workplace retirement plan offers the still-working exception can delay the RBD on that plan until April 1 of the year after the year of separation from service. As for Roth IRAs, they never have lifetime RMDs, so all Roth IRA owners are deemed to die prior to their RBD – even if they live to be 100. For this article, we will focus solely on the age 73 traditional IRA RBD.
For any IRA owner who turned age 73 in 2025, their first RMD is for 2025. This first RMD is taken in anticipation of reaching the RBD. The 2025 RMD is calculated by dividing the prior year-end balance (December 31, 2024) by the appropriate life expectancy factor. Most IRA owners will use the Uniform Lifetime Table to identify their applicable factor. For a 73-year-old, that factor is 26.5.
Example 1: Delaying RMDs
Jim turned age 73 in 2025. His IRA balance on December 31, 2024, was $875,000. Jim divides $875,000 by 26.5 and correctly determines his 2025 RMD to be $33,019. Jim must take his first RMD by April 1, 2026.
A traditional IRA owner is only allowed to delay his very first RMD until April 1 of the following year. This grace period allows those who are new to RMDs a few extra months to get into a rhythm of taking annual mandatory distributions. If the first RMD is delayed to the following year, that does not change the original calculation amount. Also, if the first RMD is delayed, the IRA owner will ultimately have to take two RMDs that next year – the delayed first RMD, and the second RMD by December 31 of that same year.
Example 2: Double RMDs
If Jim (from Example 1) delayed his 2025 RMD to the first part of 2026, he will have two RMDs to take in 2026 – the delayed 2025 RMD (by April 1) and his 2026 RMD (by December 31). Note that Jim will use his full IRA balance on December 31, 2025 to calculate his 2026 RMD. He does not get to reduce the balance by the delayed 2025 RMD amount.
The RBD is also important for determining the payout structure for IRA beneficiaries. If an IRA owner dies before his RBD, then there are no RMDs within the 10-year period for a non-eligible designated beneficiary (NEDB). Had death been on or after the RBD, then RMDs would apply in years 1-9 of that window. For non-designated (non-person) beneficiaries (NDBs – like an estate), death before or on/after the RBD is the difference between the 5-year rule and the “ghost” rule.
April 1 is not just for pranks. Missing an RMD could result in a substantial penalty. When it comes to lifetime RMDs and beneficiary payout rules, the RBD is nothing to joke about.
By Andy Ives, CFP®, AIF®
IRA Analyst
Ed Slott and Company, LLC
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