Required minimum distributions, often referred to as RMDs or minimum required distributions, are amounts that the federal government requires you to withdraw annually from traditional IRAs and employer-sponsored retirement plans after you reach age 72 (or, in some cases, after you retire). You can always withdraw more than the minimum amount from your IRA or plan in any year, but if you withdraw less than the required minimum, you will be subject to a federal penalty.
The Setting Every Community Up for Retirement Enhancement Act passed in December 2019 changed the age for required minimum distributions from 70½ to 72. If you reached age 70½ in 2019, the old rule would still have applied: You must begin taking RMDs by April 1, 2020. However, due the Coronavirus Aid, Relief, and Economic Security (CARES) Act signed on March 27, 2020, RMDs have been waived for 2020.
The RMD rules are calculated to spread out the distribution of your entire interest in an IRA or plan account over your lifetime. The purpose of the RMD rules is to ensure that people don't just accumulate retirement accounts, defer taxation, and leave these retirement funds as an inheritance. Instead, required minimum distributions generally have the effect of producing taxable income during your lifetime.