# Required Minimum Distribution (RMD)

*Retirement & Benefits — Finicade finance glossary*

An RMD is the amount you must withdraw each year from tax-deferred retirement accounts once you reach the required age, so the deferred tax finally gets paid. The penalty for missing one is severe. Because RMDs are calculated from the balance and a life-expectancy factor, a large traditional balance can force taxable income you don't need — which is the main argument for Roth conversions in the low-income years before they begin.

**Also known as:** RMD, required minimum distributions, minimum drawdown

**Related terms:** [Traditional IRA](https://finicade.com/glossary/traditional-ira), [401(k)](https://finicade.com/glossary/401k), [Tax Deferral](https://finicade.com/glossary/tax-deferral), [Roth Conversion](https://finicade.com/glossary/roth-conversion), [Qualified Charitable Distribution (QCD)](https://finicade.com/glossary/qualified-charitable-distribution)

Source: https://finicade.com/glossary/required-minimum-distribution