Definition
Mandatory annual withdrawals from traditional retirement accounts starting in your mid-70s (age 73 today, 75 for younger cohorts). Roth IRAs have no RMDs during the owner's lifetime.
Why it matters
RMDs are the tax code collecting its deferred bill: skip one and the penalty is severe. They are also a reason Roth money is precious late in life, since it faces no forced withdrawals.
Example
A 75-year-old with $800,000 in a traditional IRA must withdraw a required amount each year and pay income tax on it, whether the money is needed or not. Their Roth IRA sits untouched, compounding tax-free.
Related terms
This definition is educational, not financial, legal, or tax advice. U.S. rules and limits change; verify time-sensitive details with official sources. See our disclaimer.