If you’ve saved diligently in a traditional IRA, 401(k), 403(b), or similar tax-deferred retirement account, congratulations — you’ve built a solid nest egg! But there’s one IRS rule you can’t ignore forever: Required Minimum Distributions, or RMDs.
RMDs are the minimum amount you must withdraw each year once you hit a certain age. The purpose? The government wants to collect taxes on the pre-tax money you’ve been growing tax-deferred all these years.
The good news: the rules have become more flexible in recent years thanks to the SECURE 2.0 Act. Here’s everything you need to know in plain English.
When Do RMDs Start? It Depends on Your Birth Year
The starting age for RMDs has increased over time:
- If you were born before 1951, you likely started at age 70½ or 72 under older rules.
- If you were born in 1951–1959, you start at age 73.
- If you were born in 1960 or later, you’ll start at age 75 (this applies to those who reach the prior threshold after 2032).
In 2026, most clients who turn 73 (or have already turned 73) are in the age-73 group and must take RMDs,
—if applicable. The age-75 rule is still a decade away for most people.
Timing: When Exactly Must You Take Your First (and Future) RMDs?
- Your first RMD covers the year you reach your required age (e.g., the year you turn 73).
- You get a one-time option to delay it until April 1 of the following year.
- After the first one, every RMD is due by December 31 each year.
Tip: Many people prefer taking the first RMD by December 31 of the year they turn age 70½. Why? Delaying to April 1 means you’ll take two RMDs in the next calendar year, which could push you into a higher tax bracket.
How Much Will You Have to Withdraw? (And Yes, It’s Taxed)
Each year, your RMD is calculated like this:
- Take your account balance as of December 31 of the previous year.
- Divide it by a life expectancy factor from the IRS Uniform Lifetime Table.
Simple example: Suppose your IRA balance was $500,000 on December 31, 2025, and you’re 73 in 2026 (factor = 26.5). Your 2026 RMD would be approximately $18,868 ($500,000 ÷ 26.5).
- You can always withdraw more than the minimum — it’s just the floor.
- Withdrawals are taxed as ordinary income.
- If you have multiple IRAs, calculate each one separately, but you can pull the total from just one account (401(k)s and similar plans are handled a bit differently).
What Do You Actually Need to Do?
Here’s your straightforward action list:
- Know your age and birth year — Confirm when RMDs kick in for you.
- Calculate (or have us calculate) your RMD every year.
- Withdraw the amount by the deadline — consider setting up automatic distributions for peace of mind.
- Report it on your taxes — You’ll receive a Form 1099-R; include it on your return.
- Avoid the penalty — Missing or under-withdrawing triggers a 25% excise tax on the shortfall (reduced to 10% if you correct it within two years).
A Few Helpful Exceptions
- Still working? You may be able to delay RMDs from your current employer’s 401(k) until you retire (this doesn’t apply to IRAs).
- Roth accounts: No lifetime RMDs for the original owner (great news — though beneficiaries have their own rules).
The Bottom Line: RMDs Are Manageable — and We’re Here to Help
Required Minimum Distributions are just a normal part of retirement for tax-deferred accounts. With a little planning, you can minimize the tax impact, explore strategies like Qualified Charitable Distributions (QCDs) if you’re philanthropically inclined, and keep your overall retirement plan on track.
If you’d like a personalized RMD estimate, tax-efficient withdrawal ideas, or help integrating this into your bigger financial picture, reach out to us anytime. We’re here to make this as easy and stress-free as possible!
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Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.
This information is not intended to be a substitute for individualized tax advice. We suggest that you discuss your specific tax situation with a qualified tax advisor.