Planning For RMDs

For decades, your IRA and 401(k) did their job quietly. You contributed, you got a tax break, and the money grew without a yearly tax bill. Required minimum distributions, or RMDs, are the point where that arrangement changes. The IRS has waited patiently for its share, and now it wants you to start taking money out.

RMDs are one of the most common sources of questions I get from clients in their late 60s and 70s. This is the first post in a three-part series. Here, we'll cover the basics: what RMDs are, when they start, how they're calculated, and the questions I hear most. In Part 2, we'll look at the tax ripple effects RMDs can create and how to get ahead of them. Part 3 is all about qualified charitable distributions.

What is an RMD, and When Do They Start?

An RMD is the minimum amount the IRS requires you to withdraw each year from most tax-deferred retirement accounts. Withdrawals are taxed as ordinary income. You can always take more than the minimum, just not less.

The SECURE 2.0 Act moved the starting age back twice. Today it depends on your birth year:

Born	RMDs begin at
1951–1959	73
1960 or later	75

Accounts that require RMDs: traditional IRAs, rollover IRAs, SEP and SIMPLE IRAs, and pre-tax 401(k), 403(b), and 457(b) plans.

Accounts that don't (during your lifetime): Roth IRAs and, starting in 2024, Roth 401(k)s and other workplace Roth accounts. Taxable brokerage accounts and HSAs don't have RMDs either.

How Your RMD is Calculated

The math is simpler than most people expect. Take your account balance as of December 31 of the prior year and divide it by a "distribution period" from the IRS Uniform Lifetime Table, which is based on your age.

RMD = Prior year-end balance ÷ Distribution period for your age

Age	Distribution period	Approximate % withdrawn
73	26.5	3.8%
75	24.6	4.1%
80	20.2	5.0%
85	16.0	6.3%
90	12.2	8.2%

Example: Linda turns 73 in 2026. Her traditional IRA was worth $800,000 on December 31, 2025. Her 2026 RMD is $800,000 ÷ 26.5 = $30,189. All of it is taxable income.

If your spouse is your sole beneficiary and is more than 10 years younger than you, you'll use a different IRS table (the Joint Life and Last Survivor Table), which results in a smaller required withdrawal.

The Questions We Hear Most

When is the deadline? Your first RMD is due by April 1 of the year after you reach RMD age. Every RMD after that is due by December 31. If you turn 73 in 2026, your first RMD can wait until April 1, 2027.

Should I delay my first one until April? It depends. Delaying means you'll take two RMDs in the same tax year: your first one by April 1 and your second by December 31. That doubled income can push you into a higher bracket and raise your Medicare premiums. Sometimes delaying makes sense, but it's worth running the numbers first.

I have several accounts. Do I take an RMD from each? It depends on the account type. If you have multiple IRAs, you calculate the RMD for each, but you can withdraw the combined total from any one or more of them. The same goes for multiple 403(b)s. 401(k) plans are different: each one must satisfy its own RMD.

I'm still working. Do I have to take RMDs? From your current employer's 401(k), usually not until you retire, as long as you don't own 5% or more of the company. That exception doesn't apply to IRAs or to old 401(k)s from previous employers.

What happens if I miss one? The penalty is 25% of the amount you didn't take. If you correct it within two years, it drops to 10%. That's much better than the 50% penalty under the old rules, but still expensive.

Can I just reinvest the money? Yes, in a taxable brokerage account. You can't roll an RMD back into an IRA or into a Roth IRA. You can, however, have taxes withheld directly from the distribution, which many retirees use to cover their estimated taxes for the year.

The Bottom Line

The calculation takes a minute. Knowing the deadlines and rules keeps you clear of penalties. But the real value comes from looking at RMDs in the context of everything else: your tax bracket today and in the future, your Social Security timing, your Medicare premiums, and your charitable goals.

If you have questions about your own RMDs, we're always happy to help you think them through.

This article is for educational purposes only and isn't tax or legal advice. Please consult your tax professional about your specific situation.