Required Minimum Distribution Rules for a SIMPLE IRA (2026)

You are forced to begin withdrawing money from a majority of all tax-deferred retirement accounts when you turn 73 and a SIMPLE IRA is treated the same way as traditional IRAs. The RMD for each year is calculated using your prior year's end balance on December 31 and dividing that number by the applicable “life expectancy” factor found in one of the IRS tables. If you fail to make an annual RMD withdrawal, you will be charged an additional 25% excise tax on that missed withdrawal. However, if you correct this failure within time frames established by the IRS, there would instead be a lower 10% excise tax.

The rules exist for one simple reason, which is the Government wants the income tax it deferred while your balance grows. Owners are caught by timing because of this. Your first Required Minimum Distribution (RMD) will be due on a different deadline than all others after it.

What are the required minimum distribution rules?

You are required to withdraw a minimum amount of money from your tax-deferred retirement accounts each year after you reach the triggering age, in order for the government to finally collect taxes on that un-taxed money. This is known as a Required Minimum Distribution (RMD). The RMD provision is located within Title 26 of the United States Code 401(a)(9),^[1] and applies to traditional Individual Retirement Accounts (IRAs), SEP-IRAs, SIMPLE-IRAs, 401(k)s, and 403(b)s alike. You may take out whatever additional amounts you desire above the minimum but never less than the minimum. If you take out less than the minimum then there will be a penalty assessed by the IRS as explained below.

When do you have to start taking RMDs from a SIMPLE IRA?

You will owe your first Required Minimum Distribution (RMD) for the year you reach 73 years old. This was established by SECURE Act 2.0 and is set to increase to age 75 in 2033. As a SIMPLE IRA is an Individual Retirement Account, there is no "still working" delay allowed as with some 401(k) plans and thus RMDs must begin at age 73 regardless if you have retired from the business or are still operating it.^[2] The account type is detailed in what is a SIMPLE IRA. There are two important deadlines when considering RMDs. First, for the initial year of RMDs, they may be taken until April 1 of the next tax year, referred to as the "required beginning date". Following the initial year, all subsequent RMDs must be made by December 31 each year. While taking advantage of this one time April 1 delay allows an additional taxable distribution to be stacked on top of another within a single calendar year, it can place you into a higher tax bracket than had you taken them separately over multiple years.

How do you calculate your RMD?

Take your end-of-the-year (December 31) account balance for the previous year and divide it by the "life expectancy" factor corresponding to your age from the IRS Uniform Lifetime Table in Publication 590-B.^[3] For example, when you are 73 years old that life expectancy factor is 26.5. Therefore, a $265,000 account balance would produce an RMD of approximately $10,000 or about 3.77% of your account. The life expectancy factors decrease slightly with each birthday, so the percentages required to meet these distributions climb, even if your overall account value decreases. Your custodian will usually calculate this number and many will distribute it automatically, however, the amount is knowable on January 1 because it depends only on the prior December 31 balance.

On a $500,000 balance the Uniform Lifetime Table produces:

What is the penalty for missing an RMD?

Failure to meet an RMD results in an excise tax under 26 U.S.C. 4974 based on the difference between your required minimum distributions (RMDs) and the actual amounts withdrawn by you.^[4] In the past, a failure to take an RMD would result in a 50% excise tax. SECURE 2.0 lowered that excise tax to 25%, and it drops again to 10% for those who withdraw their missed RMD during a correction period, which typically ends at the end of the second year following the shortfall.^[4] A 25% penalty on a $7,000 shortfall is still $1,750 for a paperwork lapse.

In this SIMPLE IRA withdrawal rules document we cover how distributions are treated as ordinary income. A corrected withdrawal from an IRA (or other retirement plan) only counts when the money is taken out of the account, not before.

Do Roth accounts escape required minimum distributions?

Many owners believe all Roth accounts are exempt from RMDs. This is true only for a portion of that statement. Although every Roth IRA has never required distributions during the original owner's lifetime, employer sponsored Roth 401(k) and/or Roth 403(b) plans previously carried lifetime RMDs similar to their pre-tax counterparts. However, as part of SECURE 2.0 those lifetime RMD requirements were removed for the original owner of designated Roth accounts in an employer sponsored plan starting in 2024. Therefore, no original owner of a designated Roth account within an employer-sponsored plan has been subject to a Lifetime Required Minimum Distribution ("RMD").^[2] The rules regarding treatment of dollars in new Roth SEP and Roth SIMPLE IRAs are governed by IRS Notice 2024-2, therefore confirm the current rule with your custodian before you rely upon any exemptions.^[5] Your non-Roth balance in your SIMPLE remains fully subject to RMDs. All information about Roth mechanics can be found in our Roth SIMPLE IRA guide.

Can you combine RMDs across multiple accounts?

You determine the Required Minimum Distribution (RMD) for each of your separate Traditional and SIMPLE IRAs. However, you may aggregate all of these RMDs and withdraw the total amount from any one of your accounts. The IRA aggregation allows you to withdraw funds from an account with better investments or lower fees. Most people do not know this: each IRA custodian will report only the RMD required from their respective account(s), so it is up to you to gather and add up the totals for all of your custodians. Aggregation applies only within IRAs, so you cannot use a SIMPLE IRA withdrawal to satisfy an RMD on a 401(k), and the same holds in reverse. Nor can your own IRA ever satisfy the separate RMD that an inherited IRA carries.

The Bottom Line

You are required to make an annual minimum withdrawal of a certain amount, in accordance with your age, from tax deferred accounts once you reach the age of 73, and this includes SIMPLE IRAs. To determine how much you need to withdraw each year, divide last year's end balance by your "life expectancy" factor given to you by the IRS. Take the first one by April 1 of the next calendar year and every one after that by December 31. If a short fall exists within a particular year it should never be allowed to sit and collect the 25% excise tax. Confirm your first-year deadline with your custodian today.

This guide is educational and summarizes IRS rules for SIMPLE IRA and other retirement plan distributions. It is not investment, legal, or tax advice. Your plan documents and current IRS limits control. Talk to your tax advisor about your business's circumstances.