Do 401(k) Plans Really Require RMDs? – Avoid This Mistake + FAQs

Required Minimum Distributions (RMDs) are mandatory annual withdrawals from retirement accounts once you reach a certain age.

The answer is yes – traditional 401(k) plans are subject to RMD rules, meaning you must start taking out a minimum amount each year once you hit the required age.

This applies to employer-sponsored 401(k)s just like it does to traditional IRAs, with a few important nuances. In this comprehensive guide, we’ll break down everything you need to know about 401(k) RMDs, including how the rules differ for traditional vs. Roth 401(k) accounts, recent law changes (like the SECURE Act), comparison with IRA RMD rules, strategies to manage your RMDs, and common mistakes to avoid.

Understanding Required Minimum Distributions (RMDs)

RMDs are the minimum amount the IRS forces you to withdraw from certain retirement accounts each year after reaching a specific age.

Why do they exist? The government gives you tax-deferred growth in accounts like 401(k)s and IRAs, but eventually it wants its share of taxes. RMD rules ensure that you can’t keep retirement funds sheltered from taxes forever.

Once you’re past the defined age, you must withdraw a portion of your savings annually, even if you don’t need the money, so it can be taxed. The IRS calculates the RMD based on your account balance and life expectancy factors.

The IRS life expectancy tables provide a divisor (based on your age) for your account balance to determine that year’s minimum withdrawal.

For example, if the table says your distribution period is 25 years at age 73, about 1/25 of your account must be withdrawn (~4%). Each year, as you get older, the percentage increases slightly because your remaining life expectancy shortens.

The required beginning date is the deadline for your first RMD. By law, you must take your first required distribution by April 1 of the year after you reach the required age (more on the exact age in a moment).

After that first time, all subsequent RMDs are due by December 31 each year. Importantly, RMDs are the minimum – you can always withdraw more than the minimum if you wish (though doing so doesn’t reduce next year’s requirement).

But failing to withdraw at least the minimum is costly: any amount you under-withdraw is subject to a steep excise tax penalty. In the past, this penalty was 50% of the shortfall, though recent changes have reduced it.

RMDs are a way for the IRS to ensure retirement money gets taxed on schedule, and it’s up to each account owner to comply annually or face penalties.

401(k) RMD Rules: Are 401(k) Plans Subject to RMDs?

Yes – 401(k) plans are subject to RMD requirements. If you have a traditional 401(k) (the standard pre-tax employer-sponsored plan), you must begin taking RMDs once you reach the RMD age, provided you’re retired.

Currently, the starting age for RMDs is 73 for most people, as recent law changes increased it from the long-standing 70½. Under the latest rules, you generally need to start RMDs at age 73 if you hit that age anytime from now through 2032; for younger individuals, the starting age will eventually rise to 75.

If you were born in the 1950s, your RMDs kick in at age 73, whereas someone born in 1960 or later will start at 75. (Those born in 1950 or earlier fell under the previous rules, which required starting by age 72.) The table below summarizes the RMD start ages by birth year under current law:

Once you’ve hit the magic age, a traditional 401(k) plan does mandate annual minimum withdrawals. For example, if you turned 73 this year and are retired, you’ll need to take your first 401(k) RMD by April 1 of next year, and another by December 31 next year (so two distributions in that first calendar year if you delay the first one) .

Each subsequent year, one RMD is due by December 31. The amount of each RMD is recalculated annually based on your account’s value at the end of the previous year and your age.

Still Working Exception: One special provision with 401(k)s (and other employer plans) is the “still working” exception. If you continue working past the RMD age and do not own more than 5% of the company, you can delay RMDs from that employer’s 401(k) until you actually retire.

In other words, your required beginning date is pushed back to April 1 after the year you retire (assuming you’re already past the age threshold). This is a valuable exception that does not apply to IRAs.

For instance, suppose you’re 74 and still gainfully employed by the company sponsoring your 401(k); you generally don’t have to take RMDs from that 401(k) yet. Once you retire, though, RMDs would start the following year.

This exception is only for the 401(k) of your current employer. If you have any old 401(k) accounts from previous jobs, those are not covered by the exception – you’d need to take RMDs from those once you’re of age, even if you’re still working elsewhere (unless you roll them into your current employer’s plan, if allowed).

Traditional 401(k) Taxation: RMD withdrawals from a traditional 401(k) are taxed as ordinary income in the year you take them. Because contributions were pre-tax and growth was tax-deferred, Uncle Sam taxes every dollar you withdraw (both original contributions and earnings).

These distributions will be added to your taxable income for the year, which could potentially bump you into a higher tax bracket or increase taxes on Social Security benefits and Medicare premiums.

There is no special tax rate for RMDs – they are taxed like any other 401(k) distribution. You can choose to have taxes withheld from the RMD payment, or pay estimated taxes to cover the liability.

The key point is that a 401(k) RMD will increase your taxable income in that year (unless you have after-tax basis in your account, which is uncommon in 401(k)s aside from designated Roth subaccounts).

Are Roth 401(k)s Subject to RMDs? This is a critical twist. Historically, Roth 401(k) accounts were subject to RMDs just like traditional 401(k)s – even though the withdrawals are tax-free, the IRS still required owners to take out a minimum amount each year after reaching RMD age.

However, recent legislation changed this rule. Starting in 2024, Roth 401(k) plans are no longer subject to RMDs during the original owner’s lifetime. This change, enacted by Congress, aligns Roth 401(k)s with Roth IRAs, which have never had lifetime RMDs for the original owner.

In the past, if you had a Roth 401(k), you would have been forced to withdraw minimum amounts (which would come out tax-free but would reduce the continued tax-free growth of the account unless you reinvested the money).

Many retirees got around the old rule by rolling their Roth 401(k) balance into a Roth IRA to avoid RMDs entirely. Now, thanks to the SECURE 2.0 Act, that workaround isn’t necessary for RMD purposes – your Roth 401(k) can simply remain untouched if you don’t need the money, just like a Roth IRA.

It’s important to note that while RMD rules do not apply to Roth IRAs or designated Roth 401(k) accounts for a living owner, they do still apply after the owner’s death. Beneficiaries who inherit a Roth 401(k) or Roth IRA are subject to distribution rules (often the 10-year rule under current law) just as they would be for other accounts.

But during your lifetime, you won’t be forced to take money out of a Roth 401(k) after 2024.

Bottom Line: If you have a traditional 401(k), plan on RMDs once you hit the required age (73 under current law) and are no longer working.

If you have a Roth 401(k), as of 2024 you will not have to take RMDs from it at all during your lifetime, eliminating a former inconvenience.

Always double-check your plan’s policies and current law, but broadly speaking, 401(k) plans are subject to RMD rules – with the key exceptions of Roth accounts and the still-working delay for traditional accounts.

Examples of 401(k) RMD Scenarios

To make these rules clearer, here are a few real-world scenarios and whether an RMD would be required:

These scenarios illustrate that most retirees with traditional 401(k)s will face RMDs in their 70s, except in limited cases like continuing to work for that employer.

Roth 401(k) participants get a pass on RMDs going forward. And if you have multiple retirement plans, remember to cover each one’s requirement individually to avoid penalties.

How Recent Laws (SECURE Act and Other Legislation) Changed RMD Rules

RMD rules have seen significant updates in recent years due to federal legislation. It’s important to know the latest rules, especially if you heard old information (like the age 70½ rule) that may no longer apply. Here’s a rundown of major changes:

• Age 70½ → 72 (SECURE Act of 2019): For decades, the starting age for RMDs was 70½ (you had to start withdrawals by April 1 of the year after the year you turned 70½). The SECURE Act (Setting Every Community Up for Retirement Enhancement Act of 2019) raised the RMD beginning age to 72 for anyone who hadn’t reached 70½ by the end of 2019.

• This meant if you turned 70½ in 2020 or later, your first RMD year became the year you turn 72. This change acknowledged increasing life expectancies and let retirees keep money in tax-deferred accounts a bit longer.

• Age 72 → 73, and 75 Later (SECURE Act 2.0 of 2022): Congress wasn’t done. At the end of 2022, SECURE Act 2.0 was passed, which raised the RMD age further. Starting January 1, 2023, the RMD age jumped to 73.

• This applies to individuals who reach 72 after 2022 (for example, if you turned 72 in 2023, you now don’t take an RMD until 73 in 2024). The law will raise the age again to 75 in 2033, so younger generations can wait even longer before mandatory withdrawals.

• Under SECURE 2.0: if you were born 1951–1959, your RMD age is 73; if born 1960 or later, your RMD age will be 75. Those who had already started RMDs under the old rules must continue them, of course, but no one new will start at 72 going forward.

• Elimination of Roth 401(k) RMDs: SECURE 2.0 also included a provision to eliminate RMDs for Roth accounts in employer plans (like Roth 401(k) and Roth 403(b)). Effective 2024, Roth 401(k) owners are no longer required to take minimum distributions during their lifetime.

• Before this, if you left money in a Roth 401(k), you had to start RMDs at 72 (then 73) just like a traditional account, which was an odd quirk since Roth IRA owners never had to. This change simplifies Roth 401(k) treatment and encourages savers to keep funds in Roth employer plans without the inconvenience of forced withdrawals.

• Reduced Penalties for Missing an RMD: Failing to take an RMD used to incur one of the harshest penalties in the tax code – a 50% excise tax on the amount you should have withdrawn but didn’t. SECURE 2.0 provided some relief here by reducing the penalty to 25% in general, and even down to 10% if you promptly correct the mistake.

• “Promptly” in this context means if you take the missed distribution and file an amended tax return with an explanation by the end of the second year following the missed RMD, the penalty is 10%. The IRS also often waives RMD penalties entirely if you can show reasonable cause and that you took steps to fix the error.

• The key takeaway: the stakes for forgetting an RMD are still high, but not as draconian as before. Nonetheless, you’re far better off never missing an RMD than trying to get a penalty abated after the fact.

• CARES Act 2020 RMD Waiver: In response to the COVID-19 pandemic, Congress passed the CARES Act in 2020, which included a one-time waiver of all RMDs for the year 2020. This meant retirees could skip their 2020 distribution without penalty.

• The waiver applied to 401(k)s, 403(b)s, IRAs – all tax-deferred retirement accounts. Even if you had turned 70½ in 2019 and your first RMD was due by April 1, 2020, that first distribution could be skipped under the waiver. This was a temporary measure to help seniors avoid drawing down investments during a market crash, and to provide flexibility.

• In 2021, RMDs resumed as usual under the then-current rules (age 72 requirement). It’s useful to remember this special case, but unless a new law is passed for a future emergency, assume that in normal years you cannot skip an RMD.

• IRS Life Expectancy Tables Update: While not an act of Congress, it’s worth noting that the IRS updated the life expectancy tables used for RMD calculations in 2022. The new tables reflect longer lifespans, which slightly lowered the percentage that retirees must withdraw each year.

• For example, under the old table a 72-year-old had a life expectancy of 25.6 years (3.9% withdrawal), whereas under the new table it’s around 27.4 years (3.65% withdrawal). This update means your RMDs might be a bit smaller than they would have been under the old tables, leaving more in your account to continue growing.

• The change was a minor tweak, but it’s part of the evolving landscape of RMD rules. Your financial institution typically will calculate your RMD for you, using the latest IRS tables.

Recent legislation has generally eased RMD rules – raising the starting age, reducing penalties, and removing Roth 401(k) RMDs. Always stay updated on the current law because Congress can adjust retirement rules over time.

As of now, if you’re approaching your early 70s, double-check which rule applies to you (age 73 or 75) based on your birth year, and plan accordingly.

401(k) vs. IRA and Other Retirement Accounts: RMD Differences

While 401(k) plans and traditional IRAs both fall under RMD regulations, there are some important differences in how the rules play out for each, as well as for other types of retirement accounts:

• Traditional 401(k) vs. Traditional IRA: Both are tax-deferred accounts that require RMDs, but an IRA’s RMDs must begin once you reach the RMD age regardless of employment status, whereas a 401(k) lets you potentially delay if you’re still working for that employer.

• In other words, an IRA has no “still working exception” – even if you’re 75 and still working, your Traditional IRA RMDs had to start at 73. Another difference is in how RMDs are handled if you have multiple accounts. If you have multiple traditional IRAs, you have the flexibility to calculate each IRA’s RMD separately but then withdraw the total amount from any one or more of your IRAs in whatever split you want.

• The IRS allows you to aggregate your IRA RMDs. 401(k)s, on the other hand, cannot be aggregated across plans. An RMD must be taken separately from each 401(k) or employer plan account you own. You cannot, for example, take an RMD from your current 401(k) and have it count for an old 401(k) – each plan stands alone. This is why consolidating old 401(k)s into a single IRA or your current 401(k) can simplify RMDs: fewer accounts to manage means fewer mandatory withdrawals.

• Roth 401(k) vs. Roth IRA: As of 2024, neither Roth 401(k) nor Roth IRA has RMDs during the original owner’s life. However, prior to 2024, Roth 401(k) owners did have RMD obligations. Roth IRAs have been consistently RMD-free for owners.

• One nuance: if you still have a Roth 401(k) in 2023 and you are of RMD age, you might have had to take an RMD for 2023 (since the rule change kicks in 2024). Many people solved the Roth 401(k) RMD issue historically by rolling their balance into a Roth IRA upon retiring or reaching RMD age – now the playing field is level.

• It’s also worth noting that after the owner’s death, both Roth 401(k) and Roth IRA funds are subject to beneficiary distribution rules, typically the 10-year rule for most non-spouse beneficiaries. So, while you won’t face RMDs, your heirs eventually will have to withdraw the money (though those withdrawals would be tax-free in the case of Roth funds).

• SEP and SIMPLE IRAs: These are employer-sponsored IRAs, often used by self-employed or small businesses. They follow the same RMD rules as Traditional IRAs – i.e. RMDs must start at age 73 regardless of work status. Being a SEP or SIMPLE doesn’t grant any special RMD exemption.

• If you’re still working past RMD age and have a SIMPLE IRA, you must take RMDs from it (even if you consider it akin to a 401(k), legally it’s an IRA). The “still working exception” truly only applies to qualified employer plans like 401(k)/403(b)/457, and not to IRAs.

• 403(b) and 457 Plans: 403(b) plans (for public schools, nonprofits) and 457(b) plans (often for government workers) also have RMD rules nearly identical to 401(k)s. If you have a 403(b) or a governmental 457(b), you generally must start RMDs at the same ages (73, etc.) and you have a similar still-working exception (for the plan of your current employer).

• One minor quirk: 403(b) accounts allow aggregation of RMDs with other 403(b) accounts only. So if you have two 403(b)s, you could take the combined RMD from one of them. But a 403(b) RMD cannot satisfy a 401(k) RMD, etc. Most people don’t have multiple 403(b)s, but it’s a detail to be aware of.

• For 457(b) plans, if it’s a governmental 457, treat it like a 401(k). (Note: Non-governmental 457 plans have some different rules and are less common; they too have RMDs, but those funds often can’t be rolled over easily and might have to be taken out over time as per plan rules.)

• Thrift Savings Plan (TSP): If you’re a federal employee or retiree with a TSP, it’s essentially equivalent to a 401(k) for RMD purposes. The TSP requires RMDs at the same applicable age, and if you separate from federal service, the RMDs will kick in.

• The TSP also had the age increased to 72 and now 73 in line with the SECURE Acts. There’s a still-working exception if you’re still a federal employee. So federal retirees should remember to take RMDs from the TSP just like any other plan.

• Inherited Accounts: While this article focuses on RMDs for your own 401(k), be aware that if you inherit a retirement account (401(k) or IRA) as a beneficiary, you may be subject to a different set of distribution requirements.

• The SECURE Act in 2020 implemented a “10-year rule” for many beneficiaries, meaning an inherited 401(k) or IRA often must be emptied by the end of the 10th year after the original owner’s death.

• There are exceptions for certain eligible designated beneficiaries (spouse, minor child, disabled, etc.). If you inherit a 401(k) from someone other than your spouse, you typically will roll it into an inherited IRA and then follow the 10-year rule or life expectancy payouts if eligible.

• These inherited account rules are complex, but the key point is: RMDs don’t die with you – your beneficiaries will have to deal with required distributions too (even for Roth accounts, the funds can’t stay in the plan forever without distribution). Consult the latest IRS guidelines if you’re managing an inherited retirement account.

All tax-deferred retirement accounts have some form of required minimum distribution rule, but the timing and flexibility differ. 401(k)s and similar employer plans allow a delay if you keep working, whereas IRAs do not.

Roth accounts now uniformly have no lifetime RMD for the owner. And if you have multiple accounts, remember the separate handling: IRAs can be combined for RMD purposes, 403(b)s can be combined with each other, but 401(k)s and others must each satisfy RMDs individually.

Understanding these distinctions can help you plan where to draw from first or how to consolidate accounts to make your life easier in RMD season.

How 401(k) RMD Amounts Are Calculated and Taxed

Calculating an RMD for a 401(k) (or any account) might sound intimidating, but it follows a straightforward formula. The IRS provides life expectancy tables in Publication 590-B that give a “distribution period” based on your age each year.

For most retirees, the Uniform Lifetime Table is used. To calculate your RMD, you take the balance of your 401(k) at the end of the previous year (December 31 value), and divide it by the distribution period factor from the IRS table for your current age. The result is the minimum dollar amount you must withdraw that year.

For example, let’s say it’s 2025 and you are 75 years old with a traditional 401(k). Suppose your 401(k) balance on December 31, 2024 was $200,000.

According to the IRS Uniform Lifetime Table, the life expectancy factor at age 75 (using the updated tables) is about 24.6. Dividing $200,000 by 24.6 gives roughly $8,130. That is your RMD for 2025 – you need to withdraw at least $8,130 during the year.

If your balance was higher or you’re older, the RMD would be larger; if the balance is lower or you’re younger, the RMD is smaller. The percentage of your account that you must withdraw increases with age. At 73, it’s around 3.6%; by 80, it’s about 5%; by 90, it’s over 8%, and so on, reflecting shorter life expectancy.

Your 401(k) plan administrator typically will calculate and inform you of your RMD each year. Many plans send a notice or even automatically disburse RMDs to participants of required age.

However, the ultimate responsibility is on you as the account owner to ensure it’s taken. If you have multiple 401(k) accounts, each plan will do its own calculation for that plan’s balance. Keep records of what you withdrew to make sure it meets the required amount.

When you withdraw the RMD from a traditional 401(k), taxation kicks in. The entire RMD amount is generally taxable as ordinary income (federal and state income tax) in the year you receive it. Unlike, say, long-term capital gains or qualified dividends, retirement withdrawals do not get special tax rates – they’re just added to your wages, Social Security, etc., on your tax return.

There are no penalties on RMDs even if you’re under 59½ – the age-based early withdrawal penalty does not apply to RMDs. In fact, by definition RMDs happen after 73, so the 10% early withdrawal penalty is long gone.

But one thing to watch is that the extra income from RMDs can push you into higher tax brackets or cause collateral effects like making more of your Social Security taxable or increasing Medicare premiums (IRMAA). If you find your RMD is making your taxable income much higher than you’d like, later we’ll discuss strategies to manage that.

If you have basis (after-tax contributions) in your traditional 401(k) – which can happen if you made after-tax contributions or rolled over after-tax money – your RMD will be partially non-taxable. The plan will prorate the distribution between taxable and non-taxable dollars.

However, most people’s 401(k) contributions were pre-tax, so 100% of the RMD is taxable. In any event, the plan will issue a Form 1099-R after year-end showing the distribution amount and the taxable portion, which you’ll use to file your taxes.

What if you take out more than the RMD – does it count toward future years? No. Any extra you withdraw in a given year is just that, an extra withdrawal. It doesn’t give you credit to skip next year’s RMD. Each year’s RMD is calculated independently based on the balance at that year’s start.

So you can’t “catch up” or “pre-pay” future RMDs. You can, of course, withdraw as much as you want above the RMD – just know it’s all taxable and won’t reduce future obligations.

In summary, calculating your 401(k) RMD is a matter of applying the IRS formula (previous year-end balance ÷ life expectancy factor). The plan can help with the math, but you should understand the concept.

And once taken, those distributions are treated as income. Good tax planning is to anticipate RMDs and their tax impact as you approach your mid-70s, so you aren’t caught off guard by the tax bill.

Strategies to Manage and Minimize 401(k) RMD Obligations

RMDs, while mandatory, can be planned for and even minimized with smart strategies. If you’re concerned about the tax impact of future RMDs or simply want more control over your withdrawals, consider the following tactics well before RMD age (and even after starting RMDs, there are still some moves you can make):

• Work a Bit Longer (If Feasible): If you enjoy your job or can continue part-time, staying employed past age 73 can allow you to delay RMDs from your current employer’s 401(k) (thanks to the still-working exception). This isn’t a reason to work just to avoid RMDs, but it’s a nice perk if you plan to work anyway.

• Note that this works only for the 401(k) of the company you’re actively working for. If you separate from service, RMDs begin the following year.

• Roll Over Old 401(k)s to Your Current Plan: If you have previous employers’ 401(k) accounts and you’re now working past RMD age at a new job, consider rolling those old accounts into your current employer’s 401(k) before you hit RMD age.

• By consolidating, you could potentially have all that money eligible for the still-working delay (assuming your current plan allows roll-ins, and you’re not a 5% owner). This way, you don’t have to take RMDs from the old accounts while still working. Be sure to execute the rollover before the year you’d be required to take an RMD from the old account; once you’re mandated an RMD from an account, you can’t roll that year’s RMD amount – it must be withdrawn first.

• Roth Conversions (Before RMD Age): One of the most popular long-term strategies to reduce future RMDs is to gradually convert portions of your traditional 401(k)/IRA money into a Roth IRA in your 60s or early 70s before RMDs start.

• By paying the tax on a conversion now, you move funds into a Roth where no RMD will ever apply to you, and future growth is tax-free. The idea is to perform conversions in years when your tax rate is reasonable (for example, post-retirement but pre-RMD, you might be in a lower bracket). This shrinks the size of your tax-deferred account, which in turn means smaller RMDs later.

• Once RMDs begin at 73+, you cannot convert an RMD – you must take the RMD out first. But you can still do conversions with any remaining balance after taking the RMD in a given year. Conversions require careful tax planning so you don’t accidentally bump yourself into a very high bracket or trigger other tax issues. Many retirees convert just enough each year to “fill up” a lower tax bracket.

• Contribute to a Roth 401(k) (or Roth IRA): During your working years, if your employer offers a Roth 401(k) option, contributing to it (instead of or in addition to the traditional 401(k)) can build a pot of money that now will not have RMDs. Likewise, contributing to a Roth IRA (if eligible) or doing backdoor Roth contributions if your income is high can increase your RMD-exempt retirement savings.

• After 2024, even if money stays in the Roth 401(k), it’s exempt from RMD. But you could also roll a Roth 401(k) into a Roth IRA at retirement to consolidate accounts and maintain no RMD status. The strategy here is to balance current tax implications with future flexibility – Roth contributions/conversions mean paying some tax now in exchange for tax-free (and RMD-free) income later.

• Qualified Charitable Distributions (QCDs): If you are charitably inclined, QCDs are a fantastic strategy to handle RMDs. A QCD allows you to transfer up to $100,000 per year (indexed for inflation, $105,000 in 2024) directly from your IRA to a qualifying charity once you are 70½ or older.

• That transfer counts toward your RMD but is not counted as taxable income to you. It’s essentially a tax-free withdrawal, as long as it goes to charity. The catch: QCDs can only be done from IRAs, not directly from a 401(k). However, this is easily solved by rolling over your 401(k) to an IRA after you retire. Many people, upon reaching RMD age, move their 401(k) money into an IRA so they can take advantage of QCDs annually.

• For example, if your RMD is $10,000 and you normally give that much to charities each year, you can do a QCD of $10,000 from your IRA to satisfy the RMD and you won’t owe taxes on that distribution. QCDs can significantly reduce your taxable income while fulfilling philanthropic goals.

• It’s a win-win for you and the charity. Just be sure to follow IRS rules (the money must go directly to the charity, and you can’t also deduct it as a charitable donation – no double-dipping).

• Strategic Withdrawals in Early Retirement: Another way to reduce the eventual tax hit of RMDs is to start withdrawals earlier than required. If you retire before the RMD age (say in your 60s), it might make sense to take voluntary distributions from your 401(k)/IRA in those years to cover expenses (instead of tapping taxable accounts or Roth savings). By doing so, you’re slowly drawing down the balance.

• This can prevent having an outsized account at 73 which would lead to large RMDs. Essentially, you’re smoothing out your taxable income over more years. Some retirees follow the strategy of using IRA/401(k) funds in their 60s (possibly in combination with Roth conversions) and delay claiming Social

• Security, then later when RMDs start, their account balances (and tax burden) are lower. This is highly individual, but it’s worth modeling your projected tax brackets. Sometimes taking a bit more out in the early years at a lower tax rate is better than being forced to take a lot later at a higher tax rate.

• Adjust Your Investment Strategy: RMDs are based on account value – higher balances mean higher RMDs. You should never make investment decisions solely to minimize RMDs (after all, growth is good, even if it leads to a bigger withdrawal). But as you approach RMD age, you might adjust asset allocation or plan for liquidity.

• For instance, you might want to have sufficient cash or low-volatility assets in your 401(k)/IRA by the end of each year to comfortably make the RMD withdrawal without selling stocks at a bad time. Some people, to reduce volatility in RMD amounts, allocate a portion of the account to bonds or cash equivalents.

• Additionally, if you have substantial assets, you might invest more aggressively in Roth accounts (since no RMD there) and a bit more conservatively in the traditional accounts from which you must withdraw. This way, the Roth can keep growing untouched, and the 401(k)/IRA has enough stable value to meet withdrawals.

• This is more of a risk management strategy than a way to minimize RMDs, but it can avoid being forced to sell investments at a loss for an RMD. Just don’t forget to do it by the deadline.

• Annuitize or Use QLACs: A more specialized strategy involves Qualified Longevity Annuity Contracts (QLACs) or other annuities within a retirement plan. A QLAC is a deferred annuity you purchase inside your 401(k)/IRA that begins payments at an advanced age (up to 85). Money used to buy a QLAC is exempt from RMD calculations until those later payments commence.

• The SECURE 2.0 Act raised the allowable QLAC limit to $200,000. While this can reduce your RMDs in your 70s by carving out a chunk of the account (since that chunk won’t count towards the RMD until you’re 85), it’s essentially swapping one kind of distribution for another (later annuity payments).

• This strategy is complex and only suitable for some situations – you’d be trading liquidity for a future income stream. It’s mentioned here for completeness: if reducing RMDs in your 70s is crucial and you like the idea of longevity insurance, a QLAC might be worth discussing with a financial advisor.

• Plan RMD Timing Within the Year: You have flexibility on when to take the RMD during the calendar year (any time up to Dec 31, except first year you could delay into the next March 31). You could take it all in one go in January, or spread it quarterly, or wait until December.

• One strategy for investors is to schedule the RMD for late in the year – that way your money stays invested and growing tax-deferred for as long as possible during the year.

• Alternatively, some prefer taking it earlier to get it done and avoid a year-end rush. From a tax withholding perspective, note that an RMD taken in December can have taxes withheld and that withholding is treated as evenly paid throughout the year (for IRS estimated tax purposes).

• So even if you take a large RMD in December and withhold a chunk for taxes, it’s as if you paid quarterly. This can simplify tax payments. Ultimately, the timing within the year won’t change the amount, but it can align with your cash flow needs or market conditions. Just don’t forget to do it by the deadline.

Using one or several of these strategies can greatly ease the impact of RMDs. The overarching theme is proactive planning: the earlier you think about RMDs (even well before they start), the more options you have to mitigate their effects. By the time you’re 73, your flexibility is a bit lower (since you can’t avoid them anymore), but you can still make tactical moves like QCDs or Roth conversions of excess amounts.

Every retiree’s situation is different – it may help to consult with a financial planner or tax advisor to tailor an RMD strategy that meets your goals, whether that’s minimizing taxes, preserving assets, donating to charity, or just keeping things simple.

Common Pitfalls and Mistakes to Avoid with RMDs

Managing RMDs can be tricky, especially with the rules changing over time. Here are some common mistakes people make with their 401(k) RMDs, and how to avoid them:

• Procrastinating on the First RMD: The initial RMD has a special deadline (April 1 of the year after you hit the RMD starting age or retire, whichever is later). Some people delay that first withdrawal until the following year – which is allowed – but then forget that they’ll need to take two RMDs in that year (the delayed first one by April 1 and the second one by December 31). This double-dip can bump you into a higher tax bracket. Pitfall to avoid: Plan ahead.

• If taking two distributions in one year will cause a tax issue, you may want to take your first RMD in the calendar year you reach the age, instead of delaying into the next year. There’s no requirement to delay; it’s just an option. By taking your first RMD in the same year it’s attributable, you spread out the income.

• Missing the Deadline Entirely: Simply forgetting to take an RMD by the deadline (December 31, or April 1 for first-timers who delayed) is unfortunately not uncommon, especially if the individual is ill or not receiving proper reminders.

• The penalties for missing an RMD are steep – a 25% excise tax on the amount not withdrawn (potentially 10% if you catch it quickly). Pitfall to avoid: Mark your calendar and set reminders. Many brokerage firms and plan administrators send notices, but not all will hound you. Ultimately, it’s your responsibility.

• If you do miss a deadline, take the distribution as soon as you realize it and contact a tax professional about filing IRS Form 5329 to report the missed RMD and request a penalty waiver. The IRS is often lenient if you act fast and have a valid reason, but you don’t want to be in that position to begin with.

• Not Understanding the Still-Working Exception: Some assume that because IRAs require RMDs at 73 regardless, the same applies to their 401(k) even while working, so they start taking withdrawals unnecessarily.

• Conversely, others retire and mistakenly think they get an exception when they don’t.

• Pitfall to avoid: If you’re over 73 and still working for the company, confirm with your plan administrator that RMDs are deferred (most plans allow it). If you’re retired or separated, know that the exception no longer applies – you must take RMDs. Also, remember the exception doesn’t apply if you’re a >5% owner. Misapplying this rule can lead to either missed RMDs or needlessly early ones.

• Aggregating 401(k) RMDs or Mixing Up Accounts: A classic mistake is thinking you can take one RMD from an IRA or another 401(k) to satisfy all. For example, someone might have a 401(k) and an IRA and only take a distribution from the IRA, assuming it covers both – it does not.

• Or if they have two 401(k)s, they might take from one and ignore the other. Pitfall to avoid: Calculate each account’s RMD separately and ensure each 401(k)/403(b/457 plan has its own withdrawal. Only IRAs of the same type can be aggregated (and similarly, 403(b)s with each other). When in doubt, treat each account individually. Failing to take an RMD from one account while over-withdrawing from another doesn’t fix the shortfall in the eyes of the IRS.

• Roth 401(k) Confusion: After 2024, owners of Roth 401(k)s won’t have RMDs. But if you were subject to them before (or in 2023), you might get confused about whether you need to act. Also, some might not realize the new law and take an unnecessary distribution. Pitfall to avoid:

• Stay current. If you have a Roth 401(k) and you’re 73+, confirm whether you need an RMD or if the law change has eliminated it for you. For 2023, if you turned 73 and had a Roth 401(k), technically an RMD would have been calculated – but the law change might have a special provision for 2023’s first RMD.

• In any case, for 2024 onward, you shouldn’t have to take one. If in doubt, consult the plan or IRS guidance. Taking money out of a Roth unnecessarily means losing out on further tax-free growth.

• Thinking You Can Reinvest RMDs in a Tax-Advantaged Way: Once an RMD is distributed from the 401(k) or IRA, it cannot be rolled over or converted back into a tax-sheltered account.

• Some people think, “I don’t need this RMD money, I’ll just put it into a Roth IRA.” But the IRS explicitly prohibits rolling an RMD into another retirement account. Pitfall to avoid: If you want to move funds to a Roth, you have to do that as a Roth conversion before RMDs start (or with amounts in excess of the RMD).

• After you’re subject to RMDs, you must take the RMD out first each year before any further conversions or rollovers from that account. You can always invest the RMD in a regular taxable brokerage account if you don’t need to spend it – there’s no rule against reinvesting it in stocks or funds in a taxable environment.

• But it cannot be shielded from tax once it’s an RMD. Make sure you also don’t try to convert an RMD amount – it will be considered an excess contribution in a Roth and cause problems.

• Forgetting State Taxes and Other Impacts: While focusing on the federal RMD rules, don’t forget that RMD withdrawals may be subject to state income tax (unless you live in a state with no income tax or that exempts retirement income). And as mentioned, RMD income can affect things like Medicare premium brackets and taxation of Social Security.

• Pitfall to avoid: Include your RMD in your estimated tax planning for the year. You might need to adjust withholding or quarterly payments to account for the added income. Also consider bunching charitable donations or using QCDs if you’re charitably inclined to mitigate some state tax impact.

• Neglecting Beneficiary Checkups: This isn’t directly about taking your RMD, but it’s a related mistake. Not having updated beneficiaries on your 401(k) can lead to suboptimal post-death RMD situations for your heirs.

• For instance, if you forget to name a beneficiary, the plan might default to your estate, which usually forces a faster distribution (5-year rule or lump sum) rather than allowing a spouse to roll it over or a child to use a 10-year rule.

• Pitfall to avoid: Periodically review who you’ve named as beneficiary on your retirement accounts, especially after major life events. This ensures that if something happens to you, your beneficiaries can make the most of the distribution rules (spouses can even treat inherited 401(k) funds as their own, avoiding immediate taxation).

Being aware of these pitfalls is half the battle. RMDs add an extra layer of required action to your retirement finances, but with attention to detail and perhaps some professional guidance, you can avoid costly errors.

In short, mark your calendar, communicate with your plan providers, and when unsure about a rule, ask questions – it’s easier to prevent a mistake than to fix one after the fact when penalties or missed opportunities may be involved.

Pros and Cons of RMD Rules

Why do RMDs exist and how do they affect retirement savers? Here’s a look at the advantages and disadvantages of RMD rules from both an individual and policy standpoint:

Overall, RMD rules are a trade-off between public policy interests (tax collection, preventing ultra-long tax shelters) and individual flexibility. They provide a framework that most retirees can follow, but they undoubtedly add complexity to retirement management. Understanding the pros and cons can help you navigate the rules in a way that aligns as much as possible with your personal financial goals.

How 401(k) RMD Amounts Are Calculated and Taxed

Calculating an RMD for a 401(k) (or any account) might sound intimidating, but it follows a straightforward formula.

The IRS provides life expectancy tables in Publication 590-B that give a “distribution period” based on your age each year. For most retirees, the Uniform Lifetime Table is used.

To calculate your RMD, you take the balance of your 401(k) at the end of the previous year (December 31 value), and divide it by the distribution period factor from the IRS table for your current age. The result is the minimum dollar amount you must withdraw that year.

For example, let’s say it’s 2025 and you are 75 years old with a traditional 401(k). Suppose your 401(k) balance on December 31, 2024 was $200,000. According to the IRS Uniform Lifetime Table, the life expectancy factor at age 75 (using the updated tables) is about 24.6. Dividing $200,000 by 24.6 gives roughly $8,130.

That is your RMD for 2025 – you need to withdraw at least $8,130 during the year. If your balance was higher or you’re older, the RMD would be larger; if the balance is lower or you’re younger, the RMD is smaller.

The percentage of your account that you must withdraw increases with age. At 73, it’s around 3.6%; by 80, it’s about 5%; by 90, it’s over 8%, and so on, reflecting shorter life expectancy.

Your 401(k) plan administrator typically will calculate and inform you of your RMD each year. Many plans send a notice or even automatically disburse RMDs to participants of required age.

However, the ultimate responsibility is on you as the account owner to ensure it’s taken. If you have multiple 401(k) accounts, each plan will do its own calculation for that plan’s balance. Keep records of what you withdrew to make sure it meets the required amount.

When you withdraw the RMD from a traditional 401(k), taxation kicks in. The entire RMD amount is generally taxable as ordinary income (federal and state income tax) in the year you receive it.

Unlike, say, long-term capital gains or qualified dividends, retirement withdrawals do not get special tax rates – they’re just added to your wages, Social Security, etc., on your tax return.

There are no penalties on RMDs even if you’re under 59½ – the age-based early withdrawal penalty does not apply to RMDs. In fact, by definition RMDs happen after 73, so the 10% early withdrawal penalty is long gone. But one thing to watch is that the extra income from RMDs can push you into higher tax brackets or cause collateral effects like making more of your Social Security taxable or increasing Medicare premiums (IRMAA).

If you find your RMD is making your taxable income much higher than you’d like, later we’ll discuss strategies to manage that.

If you have basis (after-tax contributions) in your traditional 401(k) – which can happen if you made after-tax contributions or rolled over after-tax money – your RMD will be partially non-taxable. The plan will prorate the distribution between taxable and non-taxable dollars.

However, most people’s 401(k) contributions were pre-tax, so 100% of the RMD is taxable. In any event, the plan will issue a Form 1099-R after year-end showing the distribution amount and the taxable portion, which you’ll use to file your taxes.

What if you take out more than the RMD – does it count toward future years? No. Any extra you withdraw in a given year is just that, an extra withdrawal.

It doesn’t give you credit to skip next year’s RMD. Each year’s RMD is calculated independently based on the balance at that year’s start. So you can’t “catch up” or “pre-pay” future RMDs. You can, of course, withdraw as much as you want above the RMD – just know it’s all taxable and won’t reduce future obligations.

In summary, calculating your 401(k) RMD is a matter of applying the IRS formula (previous year-end balance ÷ life expectancy factor). The plan can help with the math, but you should understand the concept.

And once taken, those distributions are treated as income. Good tax planning is to anticipate RMDs and their tax impact as you approach your mid-70s, so you aren’t caught off guard by the tax bill.

Strategies to Manage and Minimize 401(k) RMD Obligations

RMDs, while mandatory, can be planned for and even minimized with smart strategies. If you’re concerned about the tax impact of future RMDs or simply want more control over your withdrawals, consider the following tactics well before RMD age (and even after starting RMDs, there are still some moves you can make):

• Work a Bit Longer (If Feasible): If you enjoy your job or can continue part-time, staying employed past age 73 can allow you to delay RMDs from your current employer’s 401(k) (thanks to the still-working exception). This isn’t a reason to work just to avoid RMDs, but it’s a nice perk if you plan to work anyway.

• Note that this works only for the 401(k) of the company you’re actively working for. If you separate from service, RMDs begin the following year.

• Roll Over Old 401(k)s to Your Current Plan: If you have previous employers’ 401(k) accounts and you’re now working past RMD age at a new job, consider rolling those old accounts into your current employer’s 401(k) before you hit RMD age.

• By consolidating, you could potentially have all that money eligible for the still-working delay (assuming your current plan allows roll-ins, and you’re not a 5% owner). This way, you don’t have to take RMDs from the old accounts while still working.

• Be sure to execute the rollover before the year you’d be required to take an RMD from the old account; once you’re mandated an RMD from an account, you can’t roll that year’s RMD amount – it must be withdrawn first.

• Roth Conversions (Before RMD Age): One of the most popular long-term strategies to reduce future RMDs is to gradually convert portions of your traditional 401(k)/IRA money into a Roth IRA in your 60s or early 70s before RMDs start.

• By paying the tax on a conversion now, you move funds into a Roth where no RMD will ever apply to you, and future growth is tax-free. The idea is to perform conversions in years when your tax rate is reasonable (for example, post-retirement but pre-RMD, you might be in a lower bracket). This shrinks the size of your tax-deferred account, which in turn means smaller RMDs later.

• Keep in mind that once RMDs begin at 73+, you cannot convert an RMD – you must take the RMD out first. But you can still do conversions with any remaining balance after taking the RMD in a given year. Conversions require careful tax planning so you don’t accidentally bump yourself into a very high bracket or trigger other tax issues. Many retirees convert just enough each year to “fill up” a lower tax bracket.

• Contribute to a Roth 401(k) (or Roth IRA): During your working years, if your employer offers a Roth 401(k) option, contributing to it (instead of or in addition to the traditional 401(k)) can build a pot of money that now will not have RMDs. Likewise, contributing to a Roth IRA (if eligible) or doing backdoor Roth contributions if your income is high can increase your RMD-exempt retirement savings.

• After 2024, even if money stays in the Roth 401(k), it’s exempt from RMD. But you could also roll a Roth 401(k) into a Roth IRA at retirement to consolidate accounts and maintain no RMD status. The strategy here is to balance current tax implications with future flexibility – Roth contributions/conversions mean paying some tax now in exchange for tax-free (and RMD-free) income later.

• Qualified Charitable Distributions (QCDs): If you are charitably inclined, QCDs are a fantastic strategy to handle RMDs. A QCD allows you to transfer up to $100,000 per year (indexed for inflation, $105,000 in 2024) directly from your IRA to a qualifying charity once you are 70½ or older.

• That transfer counts toward your RMD but is not counted as taxable income to you. It’s essentially a tax-free withdrawal, as long as it goes to charity. The catch: QCDs can only be done from IRAs, not directly from a 401(k). However, this is easily solved by rolling over your 401(k) to an IRA after you retire. Many people, upon reaching RMD age, move their 401(k) money into an IRA so they can take advantage of QCDs annually.

• For example, if your RMD is $10,000 and you normally give that much to charities each year, you can do a QCD of $10,000 from your IRA to satisfy the RMD and you won’t owe taxes on that distribution. QCDs can significantly reduce your taxable income while fulfilling philanthropic goals. It’s a win-win for you and the charity.

• Just be sure to follow IRS rules (the money must go directly to the charity, and you can’t also deduct it as a charitable donation – no double-dipping).

• Strategic Withdrawals in Early Retirement: Another way to reduce the eventual tax hit of RMDs is to start withdrawals earlier than required. If you retire before the RMD age (say in your 60s), it might make sense to take voluntary distributions from your 401(k)/IRA in those years to cover expenses (instead of tapping taxable accounts or Roth savings).

• By doing so, you’re slowly drawing down the balance. This can prevent having an outsized account at 73 which would lead to large RMDs. Essentially, you’re smoothing out your taxable income over more years.

• Some retirees follow the strategy of using IRA/401(k) funds in their 60s (possibly in combination with Roth conversions) and delay claiming Social Security, then later when RMDs start, their account balances (and tax burden) are lower.

• This is highly individual, but it’s worth modeling your projected tax brackets. Sometimes taking a bit more out in the early years at a lower tax rate is better than being forced to take a lot later at a higher tax rate.

• Adjust Your Investment Strategy: RMDs are based on account value – higher balances mean higher RMDs. You should never make investment decisions solely to minimize RMDs (after all, growth is good, even if it leads to a bigger withdrawal).

• But as you approach RMD age, you might adjust asset allocation or plan for liquidity. For instance, you might want to have sufficient cash or low-volatility assets in your 401(k)/IRA by the end of each year to comfortably make the RMD withdrawal without selling stocks at a bad time.

• Some people, to reduce volatility in RMD amounts, allocate a portion of the account to bonds or cash equivalents. Additionally, if you have substantial assets, you might invest more aggressively in Roth accounts (since no RMD there) and a bit more conservatively in the traditional accounts from which you must withdraw.

• This way, the Roth can keep growing untouched, and the 401(k)/IRA has enough stable value to meet withdrawals. This is more of a risk management strategy than a way to minimize RMDs, but it can avoid being forced to sell investments at a loss for an RMD. Just don’t forget to do it by the deadline.

• Annuitize or Use QLACs: A more specialized strategy involves Qualified Longevity Annuity Contracts (QLACs) or other annuities within a retirement plan. A QLAC is a deferred annuity you purchase inside your 401(k)/IRA that begins payments at an advanced age (up to 85).

• Money used to buy a QLAC is exempt from RMD calculations until those later payments commence. The SECURE 2.0 Act raised the allowable QLAC limit to $200,000. While this can reduce your RMDs in your 70s by carving out a chunk of the account (since that chunk won’t count towards the RMD until you’re 85), it’s essentially swapping one kind of distribution for another (later annuity payments).

• This strategy is complex and only suitable for some situations – you’d be trading liquidity for a future income stream. It’s mentioned here for completeness: if reducing RMDs in your 70s is crucial and you like the idea of longevity insurance, a QLAC might be worth discussing with a financial advisor.

• Plan RMD Timing Within the Year: You have flexibility on when to take the RMD during the calendar year (any time up to Dec 31, except first year you could delay into the next March 31).

• You could take it all in one go in January, or spread it quarterly, or wait until December. One strategy for investors is to schedule the RMD for late in the year – that way your money stays invested and growing tax-deferred for as long as possible during the year. Alternatively, some prefer taking it earlier to get it done and avoid a year-end rush.

• From a tax withholding perspective, note that an RMD taken in December can have taxes withheld and that withholding is treated as evenly paid throughout the year (for IRS estimated tax purposes). So even if you take a large RMD in December and withhold a chunk for taxes, it’s as if you paid quarterly.

• This can simplify tax payments. Ultimately, the timing within the year won’t change the amount, but it can align with your cash flow needs or market conditions. Just don’t forget to do it by the deadline.

Using one or several of these strategies can greatly ease the impact of RMDs. The overarching theme is proactive planning: the earlier you think about RMDs (even well before they start), the more options you have to mitigate their effects.

By the time you’re 73, your flexibility is a bit lower (since you can’t avoid them anymore), but you can still make tactical moves like QCDs or Roth conversions of excess amounts. Every retiree’s situation is different – it may help to consult with a financial planner or tax advisor to tailor an RMD strategy that meets your goals, whether that’s minimizing taxes, preserving assets, donating to charity, or just keeping things simple.

Frequently Asked Questions (FAQs) about 401(k) RMDs

Q: At what age do I have to start taking RMDs from my 401(k)?
A: For most people today, RMDs must start at age 73. If you were born 1960 or later, your start age will be 75. (It was 72 under prior law, 70½ before 2020.)

Q: Do I have to take an RMD from my 401(k) if I’m still working past 73?
A: Not usually, as long as you’re still working for the company that sponsors the 401(k) and you don’t own over 5% of that company. You can delay until retirement in that case.

Q: Do Roth 401(k) accounts have RMDs?
A: No – starting in 2024, Roth 401(k)s are exempt from RMDs while the owner is alive. (Before 2024, Roth 401(k)s did have RMDs, which is no longer the case.)

Q: How are 401(k) RMDs calculated?
A: The RMD is calculated by taking your 401(k) account balance on December 31 of the previous year and dividing it by an IRS life expectancy factor for your current age. The result is the minimum dollar amount you must withdraw that year.

Q: What happens if I don’t take my 401(k) RMD on time?
A: You could face a hefty penalty. The amount not withdrawn is subject to a 25% excise tax (used to be 50%). If you promptly take the missed RMD and file the proper form, the penalty may drop to 10%. It’s wise to take RMDs timely to avoid this hassle.

Q: Can I take more than the RMD from my 401(k)?
A: Yes. You’re free to withdraw more than the minimum in any year. Taking more will satisfy the RMD, but the extra amount won’t count toward future years – it’s just an additional distribution (and will be taxed as such).

Q: If I have multiple 401(k)s, can I take the total RMD from just one account?
A: No. RMDs for 401(k) and other employer plans must be taken separately from each plan. You need to calculate and withdraw the RMD from each 401(k) individually. Only IRAs allow aggregation across accounts.

Q: Can I roll over my RMD to an IRA or convert it to Roth?
A: No. An RMD, once due, is not eligible to be rolled over or converted – it has to exit the retirement account as a distribution. You must take it as cash (or taxable withdrawal). However, after taking your RMD, if you have additional funds you want to move to a Roth IRA, you could convert amounts above the RMD.

Q: Do 401(k) RMDs affect my taxes?
A: Yes. Traditional 401(k) RMDs are counted as ordinary income and will be taxed accordingly. They can increase your taxable income for the year, which might raise your tax bracket or affect other tax calculations (like Medicare premiums). Roth 401(k) RMDs (when they were required) were not taxable income, since those contributions are post-tax.

Q: What if I don’t need the RMD money?
A: You still have to take it out of the 401(k). But you have options for the money: you can reinvest it in a regular brokerage account, use it to purchase other investments, or even consider doing a Qualified Charitable Distribution (indirectly, by rolling to an IRA) to donate the amount to charity tax-free. The key is that it cannot stay in the tax-deferred 401(k).

Q: Were RMDs ever waived or suspended?
A: Yes, in 2020 all RMDs were waived due to the CARES Act (in response to COVID-19). No one was required to take an RMD in 2020. Aside from that special year, RMDs have been required annually (with the new age thresholds as laws changed).

Q: How do RMDs work for inherited 401(k)s?
A: If you inherit a 401(k) from someone other than your spouse, usually the account is transferred to an inherited IRA, and you’ll fall under the 10-year rule (meaning you must empty the account by the end of 10 years after the original owner’s death). Some beneficiaries eligible for exceptions (spouses, minor children, disabled, etc.) can stretch distributions over life expectancy or further. In any case, inherited retirement accounts have their own RMD rules – generally, the beneficiary must take distributions either over time or within 10 years, even if the original owner was not yet taking RMDs.

Q: Can I satisfy my 401(k) RMD by taking money from my IRA instead (or vice versa)?
A: No. An IRA distribution won’t count toward a 401(k)’s RMD, and a 401(k) distribution won’t count for an IRA’s RMD. They are separate categories in the IRS’s eyes. The only exception is if you have multiple IRAs – you can take the total from one IRA if you want. But 401(k) RMDs must come out of each 401(k) account itself.

Q: If I plan to donate to charity, how can I use my RMD for that?
A: The strategy is to use a Qualified Charitable Distribution (QCD). However, QCDs must come from an IRA, not a 401(k). So you would roll over 401(k) assets to an IRA (ideally done in a direct trustee-to-trustee transfer to avoid any tax withholding) and then from the IRA make the QCD directly to the charity. The amount donated (up to $100k per year, indexed) will count as your RMD and won’t be included in your income. This way, your RMD fulfills a charitable goal and you avoid the tax on that distribution.