403(b) Required Minimum Distribution: Rules, Exceptions, Penalties

Under the 403(b) required minimum distribution rules, you must begin withdrawing from a traditional 403(b) once you reach age 73, or age 75 if you were born in 1960 or later. Each year’s withdrawal equals your prior year-end balance divided by an IRS life expectancy factor, and taking less than that amount triggers a 25% excise tax on the shortfall. A few features of the 403(b), including how it treats pre-1987 money and how multiple contracts can be aggregated, work differently from other retirement accounts.

When You Have to Start

SECURE Act 2.0 sets the starting age based on your birth year:

Born 1951 through 1959: RMDs begin at age 73.
Born 1960 or later: RMDs begin at age 75.

IRS final regulations confirm that anyone born in 1959 falls under the age-73 rule.¹

Your first RMD is technically owed for the year you reach the applicable age, but the deadline is April 1 of the following year. Every RMD after that must come out by December 31.²

That grace period sounds helpful, but it comes with a cost. Push your first distribution into the next calendar year and you’ll owe two RMDs in that year: the delayed one and the current one. Two distributions stacked in a single tax year can push you into a higher bracket or raise your Medicare premiums. For most people, taking the first RMD in the year they actually hit the trigger age is the better move.

Still-Working Exception

If you continue working for the organization that sponsors your 403(b), you can delay RMDs from that plan until April 1 of the year after you retire. You must not be a 5% or greater owner of the sponsoring organization, and the plan itself has to permit the delay.³ The exception only covers the 403(b) with your current employer. A 403(b) from a previous job, any IRA, and any other retirement account still follow the standard age-based schedule.

Calculating the Amount

Take your 403(b) balance as of December 31 of the prior year and divide it by the life expectancy factor for your age in the distribution year.²

Most account holders use the IRS Uniform Lifetime Table. At age 73, the distribution period is 26.5. A $530,000 balance produces an RMD of $530,000 ÷ 26.5 = $20,000. At age 80 the factor drops to 20.2, so a larger share of the account has to come out.

There’s one substitute table. If your spouse is your sole primary beneficiary and is more than ten years younger than you, use the Joint Life and Last Survivor Expectancy Table. It produces a larger divisor and a smaller RMD.² Everyone else uses the Uniform Lifetime Table regardless of marital status or beneficiary.

Roth 403(b) Balances Are Exempt

Starting in 2024, designated Roth accounts inside employer-sponsored plans are no longer subject to RMDs. If your entire 403(b) sits in a Roth account, you have no RMD obligation. If you hold both traditional and Roth balances in the same plan, only the traditional portion generates an RMD.

Pre-1987 Balances Get Delayed Treatment

Contributions made to a 403(b) contract before January 1, 1987, along with their earnings, are not subject to the standard age-73 rule. They don’t have to be distributed until December 31 of the year you turn 75, or April 1 of the year after you retire if that’s later.³

The exclusion depends on record-keeping. The plan must have separately tracked pre-1987 amounts since the late 1980s, and the plan document has to allow the exclusion. If the plan can’t distinguish the pre-1987 portion, the entire account is subject to the normal RMD schedule. If you were with the same employer before 1987, ask your plan administrator whether that balance is being tracked separately.

Multiple 403(b) Contracts

Hold more than one 403(b)? Calculate the RMD separately for each account, using each account’s own December 31 balance. You can then satisfy the combined total by pulling from a single account or any combination you choose.⁴ That flexibility lets you drain the account with the highest fees or weakest returns and leave the better performers alone.

Aggregation only works among 403(b) contracts. You cannot use an IRA distribution to cover a 403(b) RMD or the reverse, and 401(k) accounts never aggregate with anything.

Qualified Charitable Distributions Do Not Apply

A qualified charitable distribution sends up to $105,000 per year directly from a retirement account to charity and satisfies an RMD without adding to taxable income. QCDs are limited to individual retirement plans such as traditional and inherited IRAs.⁵ A 403(b) is not eligible. Rolling the balance into a traditional IRA after separation from service opens up the option, but rolling pre-1987 money into an IRA ends its separate treatment.

Inherited 403(b) Accounts

For deaths after December 31, 2019, the SECURE Act’s ten-year rule generally requires non-spouse beneficiaries to empty the inherited account by December 31 of the tenth year following the owner’s death.³

Some beneficiaries can stretch distributions over their own life expectancy instead:

A surviving spouse, who can also roll the account into their own IRA or 403(b), or keep it as an inherited account and delay RMDs until the deceased would have reached RMD age.
Minor children of the account owner, who use the life expectancy method until reaching the age of majority, at which point the ten-year clock starts.
Disabled or chronically ill individuals.
Beneficiaries no more than ten years younger than the deceased.

If the original owner had already begun taking RMDs before death and a non-eligible beneficiary inherits, annual distributions are required during the ten-year window as well. A lump sum in year ten is not enough, and missing the annual amounts triggers the excise tax on each shortfall.

Penalty for Missing an RMD

Withdraw less than required and the IRS imposes a 25% excise tax on the shortfall, meaning the difference between what should have come out and what actually did.⁶

The rate drops to 10% if you correct the mistake in time. To qualify, you must withdraw the missed amount and file a return reflecting the tax during a window that generally runs through the end of the second tax year after the year of the shortfall.⁶

Requesting a Full Waiver

If the shortfall was due to a genuine error and you’re working to correct it, you can ask the IRS to waive the penalty entirely. File Form 5329 with a written explanation showing reasonable cause. On the form, enter “RC” and the amount you want waived on the dotted line next to the relevant penalty line, then subtract that amount from the total shortfall.⁷ The IRS reviews each request individually and tends to grant waivers when the missed distribution was taken promptly after discovery and the mistake was understandable, such as a plan administrator’s processing error, serious illness, or confusion about a recent rule change.

1
Congress.gov. Required Minimum Distribution (RMD) Rules for Original Owners of Retirement Accounts
2
Internal Revenue Service. Retirement Topics – Required Minimum Distributions (RMDs)
3
Internal Revenue Service. Retirement Plan and IRA Required Minimum Distributions FAQs
4
Internal Revenue Service. RMD Comparison Chart (IRAs vs. Defined Contribution Plans)
5
Office of the Law Revision Counsel. 26 U.S. Code 408 – Individual Retirement Accounts
6
Office of the Law Revision Counsel. 26 U.S. Code 4974 – Excise Tax on Certain Accumulations in Qualified Retirement Plans
7
Internal Revenue Service. Instructions for Form 5329