.avif)
If you own a Traditional IRA, a 401(k), or most other tax-deferred retirement accounts, the IRS will eventually require you to start taking money out — whether you need it or not.
These mandatory annual withdrawals are called Required Minimum Distributions, or RMDs. They exist because the government allowed you to defer taxes on that money for decades. At some point, the bill comes due. RMDs are how the IRS collects.
For 2026, the rules governing RMDs reflect a series of meaningful changes made by the SECURE Act of 2019 and SECURE 2.0 Act of 2022 — changes that affect when RMDs begin, which accounts are subject to them, what the penalties are for missing them, and how beneficiaries handle inherited accounts.
This guide covers everything you need to know, including strategies for reducing the tax impact of your RMDs.
The RMD rules apply to Traditional IRAs, and IRA-based plans such as SEP IRAs, SARSEP IRAs, and SIMPLE IRAs. All employer-sponsored retirement plans are also subject to RMDs, including Profit-Sharing Plans, 401(k) Plans, 403(b) Plans, and 457(b) Plans.
In plain terms: if you contributed pre-tax dollars and those dollars have been growing tax-deferred, the IRS will eventually require distributions. Every dollar you pull out is taxed as ordinary income in the year you take it.
Roth IRAs are completely exempt from RMDs during the original owner's lifetime. Your money can compound tax-free indefinitely as long as you're alive, with no mandatory withdrawals forcing your hand.
The SECURE 2.0 Act also eliminated RMDs for Roth 401(k) plans and Roth 403(b) plans while the original account holder is still alive, aligning them with Roth IRAs. Prior to 2024, Roth 401(k) plans were subject to RMDs — that rule is now gone.
The SECURE Act 2.0 raised the Required Beginning Date for RMDs from age 72 to age 73 effective January 1, 2023, and then to age 75 effective January 1, 2033. Here's how it breaks down by birth year:
In your first RMD year, the IRS allows you to delay the first RMD until April 1 of the following year — the 'Required Beginning Date,' or RBD.
This flexibility comes with a meaningful catch. If you delay your first RMD to April 1, you would then owe both your first-year and second-year RMDs in the same tax year. Two RMDs in one year could push you into a higher tax bracket, increase the taxable portion of your Social Security benefits, and trigger IRMAA surcharges on your Medicare premiums.
Our recommendation: Take your first RMD by December 31 of the year you turn 73 (or 75, if applicable), unless your advisor has identified a specific tax benefit to delaying. For most people, having two RMDs land in a single tax year creates more problems than it solves.
After your first RMD year, every subsequent RMD must be taken by December 31 of that calendar year. There is no flexibility on this deadline — missing it triggers a penalty.
Retirement plan account owners can delay taking their RMDs from an employer-sponsored plan until the year in which they retire, unless they are a 5% or greater owner of the business sponsoring the plan. This exception applies only to your current employer's plan. IRAs are always subject to RMDs once you reach RMD age, regardless of whether you're still working.
Your 2026 RMD equals your December 31, 2025 account balance divided by your IRS life expectancy factor from the Uniform Lifetime Table.
RMD = December 31 Prior-Year Balance ÷ Life Expectancy Factor
The IRS publishes the Uniform Lifetime Table in IRS Publication 590-B. Here are some common life expectancy factors:
As the table shows, your RMD percentage increases each year — meaning larger and larger forced withdrawals as you age. This is why proactive planning earlier in retirement is so valuable.
If your spouse is the sole beneficiary of your IRA and is more than 10 years younger than you, you may use the Joint Life and Last Survivor Table rather than the Uniform Lifetime Table. This results in a lower RMD because the distribution period is extended to account for the younger spouse's longer life expectancy.
If you own multiple Traditional IRAs, you can calculate the RMD for each account separately, then take the total from any one IRA or any combination of IRAs you choose. You are not required to take a proportional RMD from each account — you have flexibility in which accounts you draw from.
For 401(k) plans and other employer-sponsored accounts, the rules are different: each plan requires its own separate RMD. You cannot aggregate 401(k) RMDs with IRA RMDs.
Some IRA custodians will calculate your RMD and send you an annual notice (it also may be on your account statement). However, the account owner is ultimately responsible for taking the correct RMD each year. Verify the calculation yourself — or ask your advisor to do so — rather than assuming the custodian's figure is correct. Errors happen.
Missing an RMD is expensive. Failure to take an RMD on time results in an excise tax equal to 25% of the amount not withdrawn. On a $20,000 RMD, that's a $5,000 penalty — just for missing the deadline.
The excise tax can be reduced to 10% if the error is corrected within two years. And in some cases, the penalty can be waived entirely if the account owner demonstrates the shortfall was due to a reasonable error and the problem is fixed immediately.
In either scenario, account owners must submit Form 5329 along with their tax return. Those seeking a full waiver must also include a letter of explanation.
Important: One critical rule — you cannot roll an RMD into another tax-deferred account. If you receive an RMD and attempt to roll it over, the IRS will treat the rollover as an excess contribution. This is one of the most costly and avoidable RMD mistakes we see.
Surviving spouses have the most flexibility of any beneficiary type. They can:
For most non-spouse beneficiaries — including adult children — the 'stretch IRA' is largely gone. Most non-spouse beneficiaries are now required to fully distribute the inherited account within 10 years of the original owner's death.
An important nuance: if the original owner had already begun taking RMDs, the beneficiary must also take annual distributions during years one through nine of the 10-year period — not just empty the account by year 10. Missing these annual distributions triggers the 25% penalty on the amount that should have been taken.
If the original owner had not yet reached RMD age at the time of death, the beneficiary must still empty the account by year 10 but has flexibility on the timing of distributions within that window.
A subset of beneficiaries — called 'eligible designated beneficiaries' — are exempt from the 10-year rule and can still stretch distributions over their lifetime. These include:
RMDs are taxable income. But they don't have to be as costly as many people fear. With thoughtful planning, you can significantly reduce the tax burden associated with mandatory distributions.
The Qualified Charitable Distribution is, in our view, the single most powerful RMD tax strategy available to retirees who give to charity.
A QCD allows you to direct up to $111,000 (the 2026 limit, indexed for inflation) from your IRA directly to a qualified charity. The distribution counts toward your RMD for the year — but is completely excluded from your taxable income. This is not a deduction. It's an exclusion — the money never shows up as income on your tax return at all.
Even if you take the standard deduction and receive no tax benefit from charitable donations made from your bank account, a QCD provides a dollar-for-dollar reduction in your taxable income. For retirees facing Medicare IRMAA surcharges, Social Security taxation, or higher tax brackets driven by RMD income, this can be worth thousands of dollars annually.
Key rules for QCDs:
Timing tip: Because the IRS treats the first dollars out of your IRA as satisfying your RMD, take your QCD before any regular withdrawals in any given year.
The years between retirement and your RMD starting age represent one of the most valuable tax planning windows of your financial life.
During this period, your taxable income is typically lower — no salary, and RMDs haven't started yet. This creates an opportunity to convert Traditional IRA funds to Roth at a lower tax rate, reducing the balance that will eventually be subject to RMDs. Every dollar you convert to a Roth IRA is a dollar that will never generate an RMD.
The math can be compelling. A retiree who converts $100,000 per year from age 65 to 72 at a 22% marginal rate pays $22,000 in taxes today but eliminates potentially $100,000 or more in future RMD income — income that might otherwise be taxed at a higher rate, trigger IRMAA surcharges, or increase the taxable portion of Social Security.
Roth conversion strategy is highly individual. The right conversion amount depends on your current and projected future tax brackets, the size of your IRA, your other income sources, and your estate planning goals. This is a planning conversation worth having with your advisor well before RMDs begin.
As discussed above, you have the option to delay your first RMD to April 1 of the following year. In most cases, we recommend against this — two RMDs in one year creates a compounding tax problem.
However, there are situations where delaying makes sense. If your income in the first RMD year is unusually high — due to a business sale, a large capital gain, or other one-time event — it may be worth taking the first RMD in the following year when your income is lower. This is a calculation worth running with your advisor in the year you turn RMD age.
If you own multiple Traditional IRAs, you can satisfy the combined RMD by withdrawing from whichever account makes the most financial sense. This flexibility allows you to:
Medicare IRMAA surcharges are triggered by your income from two years prior. In 2026, a single retiree with income above $106,000 begins paying Medicare Part B and Part D surcharges that can add thousands of dollars annually.
RMD income counts directly toward your IRMAA calculation. For retirees whose income is near an IRMAA threshold, managing the size of distributions — through QCDs, Roth conversions in prior years, or strategic timing — can prevent costly surcharge cliffs.
This one is simple but frequently overlooked: take your RMD early in the year, not at the last minute. Waiting until December creates several risks — market downturns that may complicate the timing, custodian processing delays, and simply forgetting. Spreading the RMD across the year as monthly distributions can also help with cash flow planning and makes the tax liability more predictable.
If you don't need your RMD for living expenses, you're not required to spend it. You can take the distribution (pay the taxes) and immediately reinvest the after-tax proceeds in a taxable brokerage account.
Those reinvested assets will receive a stepped-up cost basis at death, which can significantly reduce capital gains taxes for your heirs. And unlike your IRA, there are no RMDs from a taxable brokerage account.
Required Minimum Distributions are a reality of owning tax-deferred retirement accounts. They can't be avoided indefinitely — but their tax impact can absolutely be managed.
The most important thing to understand is that RMD planning is not a December activity. It's a year-round planning discipline that intersects with your tax strategy, your Social Security timing, your Medicare costs, your estate plan, and your charitable giving — all at once.
At Arcadia Private Wealth, coordinating RMD strategy with the rest of a client's financial plan is one of the most meaningful things we do. The difference between a reactive approach — taking whatever the custodian calculates and paying the taxes — and a proactive approach — using QCDs, Roth conversions, and strategic timing — can easily be tens of thousands of dollars over a retirement.
If you'd like to review your RMD strategy and understand how it fits into your broader financial plan, we'd welcome the conversation.
Disclosure: This article is for informational purposes only and does not constitute personalized tax, legal, or investment advice. Tax rules are subject to change. Please consult a qualified financial advisor and CPA for guidance specific to your situation. Arcadia Private Wealth LLC is a Registered Investment Adviser in the state of California. Advisory services are only offered to clients or prospective clients where we are properly registered or exempt from registration.
Grant Webster, CFP®, TPCP®
Founder, Wealth Advisor