RMD stands for "Required Minimum Distribution." It is a rule set by the IRS that mandates individuals to withdraw a minimum amount from their retirement accounts, such as 401(k)s and IRAs, once they reach a certain age, typically 72 years old. This requirement ensures that individuals do not keep their retirement savings tax-deferred indefinitely. The amount that must be withdrawn each year is calculated based on the account balance and the individual's life expectancy. Failing to take the RMD can result in significant penalties, often up to 50% of the amount that should have been withdrawn.