RMD stands for Required Minimum Distribution, which is the minimum amount that must be withdrawn from certain retirement accounts annually after a certain age. The RMD rules apply to various retirement accounts, including 401(k), IRA, 403(b), and 457(b) accounts. The amount of RMD is based on the account balance and life expectancy, and the IRS provides worksheets and tables to calculate RMDs. RMDs must be taken not just from 401(k) plans but from other retirement plans as well. The RMD rules for 401(k) plans can get complicated, but the basics are as follows:

• An RMD is the minimum amount that must be distributed to you from your 401(k) account based on a life expectancy factor.
• RMDs from your 401(k) account cannot be rolled to another 401(k) plan or IRA. You must take RMDs as cash.
• The RMD amount is usually based on the IRS Uniform Lifetime Table and the fair market value (FMV) or entire interest value (EIV) of your retirement plan on Dec. 31 of the prior year.
• RMDs are determined separately for each of your retirement plans and are required per individual, not per couple.
• If you do not take your RMD, youll face a 50% penalty on whatever amount you fail to withdraw for 2022 and previous tax years. The Secure Act 2.0 decreases the penalty to 25% for 2023 and future tax years.

Its important to note that there are exceptions to RMDs, and some qualified plans allow certain participants to defer the start of their RMDs until they actually retire, even if they are older than age 73.