Saving money for retirement in a tax-deferred account has many benefits – but you can only defer taxes so long before they must be paid, which is why U.S. tax law requires a Required Minimum Distribution (RMD). An RMD is the amount of money that must be withdrawn annually from a tax deferred account (including traditional IRAs, SEP IRAs, and Simple IRAs) once the owner reaches a certain age. RMDs are taxed as ordinary income.