Do SEP IRAs Have RMDs? Deadlines, Calculation, and Penalties

Yes, SEP IRAs are subject to required minimum distributions, and the rules are identical to those for Traditional IRAs. If you own a SEP IRA, you generally must begin withdrawing from it by April 1 of the year after you turn 73, and each year’s amount is your prior December 31 balance divided by an IRS life expectancy factor.¹ There is no lighter schedule for SEP accounts, and staying employed does not push back the start date.

When Your First RMD Is Due

For most people at retirement age today, the trigger is 73. The SECURE 2.0 Act of 2022 set that threshold for anyone who turned 72 after December 31, 2022.² If you were born in 1960 or later, it rises to 75 starting in 2033.³

Your first RMD is due by April 1 of the calendar year after you reach the applicable age. Every RMD after that is due by December 31 of its own year.⁴ Waiting until that April 1 deadline puts two RMDs in the same tax year: the delayed one plus the current year’s. That can push you into a higher bracket, so many people take the first distribution in the year they actually reach the threshold age.

Still Working Does Not Delay It

Some employer plans, such as 401(k)s, let workers who still hold their job and own no more than 5% of the sponsoring business delay RMDs until they retire. That exception does not apply to any IRA, including SEP IRAs.²

This catches self-employed owners off guard. A sole proprietor who set up a SEP IRA and is still actively running the business at 74 must still take the RMD. Earned income, continued contributions, and active employment do not stop the clock.

How to Calculate the Amount

Take your SEP IRA balance as of December 31 of the prior year and divide it by the life expectancy factor from the IRS Uniform Lifetime Table (Table III in Publication 590-B).⁵ The factor shrinks each year, so the required percentage rises with age.

The factor for a 75-year-old is 24.6.⁶ A $100,000 balance at that age produces an RMD of $100,000 ÷ 24.6, or $4,065.04. At 80, the factor falls to 20.2, so the same $100,000 balance would require $4,950.50.

The Younger-Spouse Exception

The Uniform Lifetime Table is the default. If your sole beneficiary is your spouse and that spouse is more than 10 years younger than you, use the Joint Life and Last Survivor Expectancy Table (Table II) instead.² That table gives a larger divisor and a smaller required distribution. The exact factor is in Publication 590-B.

If You Have More Than One IRA

Own a SEP IRA plus a Traditional IRA or a SIMPLE IRA? Calculate the RMD for each account separately, then add the amounts and withdraw the total from whichever IRA you choose.⁵ SEP, Traditional, and SIMPLE IRAs all share this aggregation.

A 401(k) does not. Its RMD has to come out of the 401(k) itself and cannot be satisfied from an IRA. The 403(b) plans form their own separate aggregation group.⁵

How the Withdrawal Is Taxed

Every dollar you take out of a SEP IRA is taxed as ordinary income in the year received.⁷ Contributions went in pre-tax, so nothing about the withdrawal qualifies for capital gains treatment, even if the growth came from long-held stock. If your state has an income tax, the RMD is generally subject to it as well.

You Can Keep Contributing

Starting RMDs does not close the door on contributions. If you still have earned income, employer contributions to your SEP IRA can continue while you take required withdrawals.⁴ For 2026, the maximum SEP contribution is 25% of compensation, up to $72,000.

A 74-year-old contributing $30,000 and withdrawing an $8,000 RMD is still growing the account on net. New contributions do raise the December 31 balance, which raises next year’s RMD.

Using a Qualified Charitable Distribution

A qualified charitable distribution transfers money directly from an IRA to a qualifying charity, counts toward your RMD, and is excluded from taxable income. The 2026 limit is $111,000 per year, and you have to be at least 70½.⁸ The custodian must send the funds straight to the charity.

For SEP IRAs specifically, there is a catch: the account must be “inactive,” meaning no employer contributions in the current year, before QCDs are allowed from it. If you are still contributing each year, one workaround is to roll the SEP balance into a separate Traditional IRA that receives no employer money, then make QCDs from that account. A SEP IRA that has received no new contributions in the current year already qualifies as inactive.

What Happens If You Miss an RMD

Take less than required, or forget entirely, and the IRS imposes an excise tax of 25% on the shortfall.⁹ On a $5,000 miss, that is $1,250 in penalty before the eventual income tax on the withdrawal itself.

The penalty drops to 10% if you correct the mistake within the correction window, which generally runs through the end of the second tax year after the year of the miss.⁹ To get the reduced rate, withdraw the missed amount and file Form 5329 reporting the corrected tax within that window.¹⁰

If the failure was an honest mistake, you can request a full waiver by attaching a written explanation to Form 5329 describing the error and how you fixed it.¹⁰ The IRS decides case by case. A first-time miss corrected promptly with a reasonable explanation, such as a custodian error or a medical emergency, tends to be treated favorably. Repeated failures or large shortfalls draw more scrutiny.

1
Internal Revenue Service. Retirement Plans FAQs Regarding SEPs
2
Internal Revenue Service. Retirement Topics Required Minimum Distributions
3
Congressional Research Service. Required Minimum Distribution (RMD) Rules for Original Owners of Retirement Accounts
4
Internal Revenue Service. Retirement Plan and IRA Required Minimum Distributions FAQs
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Internal Revenue Service. RMD Comparison Chart IRAs vs Defined Contribution Plans
6
Internal Revenue Service. Publication 590-B – Distributions from Individual Retirement Arrangements (IRAs)
7
Internal Revenue Service. Simplified Employee Pension Plan (SEP)
8
Congressional Research Service. Qualified Charitable Distributions From Individual Retirement Accounts
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Office of the Law Revision Counsel. 26 USC 4974 – Excise Tax on Certain Accumulations in Qualified Retirement Plans
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Internal Revenue Service. Instructions for Form 5329