RMD Planning: The Complete Guide to Required Minimum Distributions

What RMDs are

The federal tax code gives tax-deferred retirement accounts — traditional IRAs, 401(k)s, 403(b)s, 457 plans, and similar — a powerful benefit: contributions reduce current-year taxable income, and investment growth compounds tax-free inside the account. In exchange for that benefit, the IRS requires you to eventually withdraw the money and pay ordinary income tax on it. Required Minimum Distributions enforce that eventual payout.

Once you reach RMD age, you must withdraw at least a minimum amount each year, calculated as a fraction of the account balance. The fraction is based on life expectancy tables designed to ensure the account is gradually emptied over your remaining expected lifespan. RMDs are fully taxable as ordinary income in the year received.

The structure means most retirees face a shift in their tax picture at RMD age. Before RMDs, you control your income — you decide when to withdraw from traditional accounts, when to realize capital gains, whether to delay Social Security. After RMDs begin, a significant chunk of income is mandatory. If your traditional IRA is large, the RMD alone may push you into a higher marginal tax bracket, trigger IRMAA surcharges on Medicare premiums, or increase the taxable portion of Social Security benefits. Planning ahead of RMD age is the single most effective way to shape the post-RMD tax picture.

Who is subject to RMDs

RMDs apply to owners of tax-deferred retirement accounts starting at a specific age:

• Age 73 if you were born between January 1, 1951 and December 31, 1959
• Age 75 if you were born on or after January 1, 1960

The SECURE Act of 2019 moved the RMD age from 70½ to 72. SECURE 2.0, enacted at the end of 2022, moved it again — first to 73 for most current retirees, and eventually to 75 for younger cohorts. The timing depends on your birth year, not when you retired.

Accounts subject to RMDs (owner’s lifetime):

• Traditional IRAs, Rollover IRAs, SEP IRAs, SIMPLE IRAs
• Traditional 401(k), 403(b), 457(b) plans (governmental and certain non-profit)
• Keogh plans and other tax-deferred employer plans

Accounts exempt from owner RMDs:

• Roth IRAs (no lifetime RMDs for the original owner — one of the primary advantages of Roth over Traditional)
• Roth 401(k) and Roth 403(b) accounts (exempt as of 2024 under SECURE 2.0 — previously required RMDs during the owner’s lifetime)
• Employer-sponsored plans where you’re still actively employed after RMD age, if you’re not a 5%+ owner of the company (the “still-working exception,” typically applies only to the current employer’s plan, not former employers’)

When the first RMD is due

Your first RMD is for the calendar year in which you reach RMD age. You have until April 1 of the following year to take that first distribution. This creates a well-known pitfall: if you wait until the April 1 deadline, you’ll also owe your second RMD by December 31 of that same year — two RMDs in one tax year, potentially pushing you into a higher bracket.

For most retirees, the better approach is to take the first RMD in the calendar year you reach RMD age rather than waiting for the April 1 grace period. Each subsequent RMD is due by December 31 of its year.

How RMDs are calculated

The basic formula:

RMD = Prior year-end account balance ÷ Life expectancy factor

Account balance is the fair market value of the account on December 31 of the year before the RMD year. Custodians (Fidelity, Schwab, Vanguard, etc.) typically calculate and report RMD amounts for their customers based on the prior year-end balance.

Life expectancy factor comes from one of three IRS tables, chosen based on your situation:

• Uniform Lifetime Table (most common). Used by single account owners and married owners whose spouse is not more than 10 years younger (or whose spouse is not the sole beneficiary). Factors range from 26.5 at age 73 to 1.9 at age 120+.
• Joint and Last Survivor Table. Used when the account owner’s spouse is more than 10 years younger and is the sole beneficiary. Factors are larger (meaning smaller RMDs) because the payout is stretched over two expected lifespans.
• Single Life Table. Used by beneficiaries of inherited IRAs (not by original owners). Factors are smaller than the Uniform Lifetime Table — larger RMDs.

Representative Uniform Lifetime Table factors:

How to Calculate Your RMD covers the math in depth, including worked examples and the choice between tables.

Account aggregation rules

If you have multiple retirement accounts, how you aggregate RMDs across them depends on account type:

Traditional IRAs. RMDs can be calculated per-account but withdrawn from any single IRA or combination. You calculate the total RMD across all your traditional, rollover, SEP, and SIMPLE IRAs, then withdraw that total from whichever IRA you choose. Flexibility is useful for custody consolidation or when one IRA holds assets you’d rather not sell.

401(k), 403(b), 457(b) plans. RMDs must be calculated AND withdrawn per-plan. You cannot aggregate across employer plans or between employer plans and IRAs. If you have three former-employer 401(k)s, each generates its own separate RMD that must come from that specific plan.

Inherited IRAs. Calculated per inherited account. If you inherited IRAs from multiple people, you cannot combine them for RMD purposes.

For simplicity, many retirees consolidate old 401(k)s into an IRA before RMD age — reducing the number of accounts that require separate RMD management.

Missed RMD penalties

Failing to take a required distribution triggers an IRS excise tax. Under SECURE 2.0, the penalty is:

• 25% of the amount that should have been distributed — reduced from 50% under the old rules
• 10% if you correct the missed distribution within two years of the deadline

You correct a missed RMD by withdrawing the missed amount plus the current year’s required amount, then filing IRS Form 5329 with your tax return for the year of the missed distribution. The IRS may waive the penalty entirely if you can show reasonable cause and demonstrate corrective action.

The reduction from 50% to 25% (and 10% with correction) was a SECURE 2.0 enhancement. Prior to the change, missed RMD penalties were among the harshest in the tax code.

Strategies to reduce RMD burden

The core reality: traditional-IRA money will eventually be taxed. The question is when, at what rate, and as whose income. Good RMD planning shapes the answer.

Roth conversions before RMD age. Converting traditional IRA balances to Roth IRA reduces the traditional balance permanently, reducing all future RMDs. Because Roth IRAs have no owner-lifetime RMDs, converted money never creates a future RMD obligation. Conversions should generally be done during years when your marginal tax rate is lower than it will be after RMDs begin — typically in the window between retirement and Social Security claiming, and between Social Security claiming and RMD age. Scala — Roth Conversions: The Complete Guide — covers this in depth.

Qualified Charitable Distributions starting at 70½. If you have charitable inclinations, QCDs are often the single most tax-efficient way to satisfy RMDs. A QCD is a direct transfer from your IRA to a qualifying 501(c)(3) — the amount doesn’t count as income, doesn’t increase your AGI, and counts toward your annual RMD. 2026 limit: $111,000 per person. QCDs can start at age 70½, which is earlier than RMD age, letting you reduce the traditional IRA balance before RMDs even begin. The QCD Playbook for Retirees covers QCD mechanics and coordination with RMDs.

Tax-efficient withdrawal sequencing in pre-RMD years. Many retirees default to withdrawing from taxable accounts first to preserve tax-advantaged growth. That’s often correct, but not universally — if your traditional IRA is large enough that post-RMD-age tax rates will be meaningfully higher, filling up low brackets with IRA withdrawals before RMDs begin can reduce lifetime taxes. The Ordo app models withdrawal sequencing; the Withdrawal Sequencing guide covers the reasoning.

Coordination with Social Security timing. Social Security benefits are partially taxed based on combined income (a measure that includes RMDs, pensions, and other taxable income). Large RMDs can push more of your Social Security into taxable status. For some households, delaying Social Security until 70 while doing Roth conversions during pre-RMD years produces a more favorable tax profile than claiming Social Security earlier and leaving traditional balances intact. Hora — the Social Security optimizer — handles this interaction.

Asset location within the IRA. RMDs come from the IRA regardless of which assets you hold inside it. Holding tax-inefficient assets (bonds, REITs, actively-traded funds) inside the IRA minimizes the tax hit of the RMD relative to holding them in taxable accounts. Asset Location: Right Asset, Right Account covers the broader placement strategy.

Acknowledging what you can’t change. You cannot defer RMDs past their required date (short of specific narrow exceptions). You cannot transfer RMD dollars to a Roth (QCD transfers to charity are the only income-avoidance route). You cannot skip a year. Once you’re in the RMD regime, the planning shifts from “how to avoid RMDs” to “how to use the income most effectively.”

Inherited IRAs and the 10-year rule

For accounts inherited after the original owner’s death, RMD rules depend on your relationship to the decedent and when they died.

Eligible Designated Beneficiaries (EDBs) can still use the pre-SECURE “stretch” approach — taking distributions over their own life expectancy. EDBs include surviving spouses, minor children of the decedent (until age 21), chronically ill or disabled individuals, and beneficiaries not more than 10 years younger than the decedent.

Non-Eligible Designated Beneficiaries (most adult children, grandchildren, non-spouse relatives) are subject to the SECURE Act’s 10-year rule: the inherited account must be fully distributed by December 31 of the tenth year after the decedent’s death.

A significant 2025 development: the IRS finalized regulations requiring annual RMDs during the 10-year window for NEDBs who inherited from someone who had already reached their Required Beginning Date (i.e., the decedent was already taking RMDs when they died). The IRS waived penalties for these annual RMDs from 2020 through 2024 while the rules were being clarified. Starting in 2025, annual RMDs are required and the 25% missed-RMD penalty applies.

Inherited IRA RMD Rules for 2026 walks through the beneficiary categories and what applies in your specific situation.

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Frequently asked questions

Sources

Chris Gammill is the founder of Ignis Tools and writes about tax-aware retirement planning. Research and drafting assisted by AI tools; all figures and claims verified by the author against primary sources.

1. IRS Publication 590-B — Distributions from Individual Retirement Arrangements — retrieved 2026-04-20
2. IRS — Retirement plan and IRA Required Minimum Distributions FAQs — retrieved 2026-04-20
3. Congressional Research Service — Qualified Charitable Distributions from IRAs — retrieved 2026-04-20
4. Fidelity — Inherited IRA Withdrawals & Beneficiary RMD Rules — retrieved 2026-04-20