After years of contributing to tax-deferred retirement accounts, there comes a point when the government requires you to begin withdrawing from them. These required minimum distributions, or RMDs, follow a specific set of rules around timing and calculation.
Understanding how RMDs work in 2026, and how they connect to the rest of your financial strategy, can give you a clearer foundation for planning your retirement income.
What Is a Required Minimum Distribution?
A required minimum distribution (RMD) is the minimum amount you must withdraw each year from certain tax-deferred retirement accounts once you reach a specified age. This requirement applies to accounts such as traditional IRAs, 401(k)s, 403(b)s, SEP IRAs, and SIMPLE IRAs. Roth IRAs are not subject to required minimum distributions during the original owner's lifetime. Beginning in 2024, designated Roth accounts in employer-sponsored plans, such as Roth 401(k)s and Roth 403(b)s, are also exempt from lifetime RMDs for the original account owner.
Since most contributions to tax-deferred retirement accounts were made on a pre-tax basis, and investment earnings have generally grown tax-deferred, RMDs are typically taxed as ordinary income when withdrawn.
Your RMD is calculated by dividing your account balance as of December 31 of the prior year by a distribution period the IRS assigns based on your age. This distribution period generally comes from the IRS Uniform Lifetime Table. If your spouse is your sole beneficiary and is more than 10 years younger than you, the IRS instead requires the Joint Life and Last Survivor Expectancy Table, which typically results in a lower required withdrawal. Each account's RMD is calculated separately. Traditional IRAs generally allow multiple IRA RMDs to be aggregated and withdrawn from one or more IRAs. Employer-sponsored retirement plans, such as 401(k)s, generally require RMDs to be taken separately from each plan.
You are not limited to withdrawing only the required minimum. Some clients choose to withdraw more in a given year for planning reasons, though any amount withdrawn above the RMD does not reduce future years' required distributions, since each year's amount is recalculated independently.
When Do Required Minimum Distributions Begin?
Most individuals begin taking RMDs at age 73. For those born in 1960 or later, the starting age moves to 75. Your first RMD can be delayed until April 1 of the year following the year you reach your required beginning age, though doing so means taking two distributions in the same tax year, which increases your taxable income for that year. Many people find that taking the first distribution by December 31 of the year they reach their required beginning age fits more naturally into their overall tax planning.
These rules apply to retirement accounts you own. Inherited retirement accounts often follow different distribution schedules that depend on when the original owner died, your relationship to them, and other IRS rules.
If you are still working and participate in your current employer's retirement plan, and you are not considered a more-than-5% owner under IRS rules, you may be able to delay RMDs from that specific plan until you retire. This exception does not extend to other tax-deferred accounts you may hold, such as traditional IRAs from previous employers.
The Annual Deadline
RMDs must be withdrawn by December 31st each year, with the exception of your first RMD as noted above. A missed or insufficient RMD may be subject to a 25% excise tax on the shortfall. In many cases, the penalty is reduced to 10% if corrected within the applicable time frame, and the IRS may waive the penalty altogether when certain requirements are met.
Many of our clients build their RMD into a standing annual review or automate the withdrawal altogether, so it becomes a routine part of their financial calendar rather than something to track down each December.
Coordinating RMDs With the Rest of Your Financial Plan
An RMD on its own is simply a required withdrawal. Viewed alongside the rest of your financial picture, it becomes one input among several, with connections to your tax bracket, your Social Security income, and your Medicare costs.
The size of your RMD can influence your marginal tax bracket. Because RMDs generally increase your taxable income, they can also increase your provisional income, which may cause a larger portion of your Social Security benefits to become taxable. They may also affect your Medicare Part B and Part D premiums through IRMAA, the income-related adjustment that applies above certain thresholds. Because IRMAA is based on income from two years prior, a given year's RMD can influence Medicare costs well into the future.
This is why we encourage clients to review RMDs annually as part of a coordinated planning conversation. Strategies worth discussing with your advisor include:
- Withdrawing from tax-deferred accounts before RMD age begins
- Using Roth conversions in lower-income years to reduce the size of future RMDs
- Directing charitable giving through a qualified charitable distribution
It is worth noting that the RMD itself cannot be converted into a Roth IRA. The required amount must first be withdrawn as taxable income, or directed to charity through a QCD. Only funds beyond that amount are eligible for a Roth conversion.
Factoring In Qualified Charitable Distributions
If you are age 70½ or older and charitably inclined, a qualified charitable distribution allows you to send up to $111,000 in 2026 directly from your IRA to a qualifying charity. This limit applies on a per-person basis, so married couples who each hold IRAs and meet the age requirement may each direct up to this amount. Amounts transferred directly to charity through a QCD can satisfy all or part of your RMD for the year, provided the QCD is completed before that portion of the RMD has already been distributed.
Since the distribution is excluded from your taxable income, this approach may be more tax-efficient, for many donors, than withdrawing the funds and donating the cash separately, depending on your individual tax circumstances. QCDs are not permitted from 401(k)s or other employer-sponsored retirement plans, so this strategy generally applies to IRA assets.
Frequently Asked Questions
When do RMDs begin?
Most individuals begin taking RMDs at age 73, or age 75 if born in 1960 or later. The first RMD can be delayed until April 1 of the following year, though this results in two distributions in the same tax year.
What happens if I miss the RMD deadline?
A missed or insufficient RMD may be subject to a 25% excise tax on the shortfall. The penalty is often reduced to 10% if corrected within the applicable time frame, and in certain circumstances, the IRS may waive the penalty altogether.
Can charitable giving help with my RMD?
Yes. A qualified charitable distribution lets you direct up to $111,000 in 2026 from an IRA directly to a qualifying charity. This limit applies on a per-person basis. When completed before taking the applicable portion of your RMD, the amount can satisfy all or part of your required minimum distribution while remaining excluded from your taxable income.
RMDs are a recurring part of retirement planning, not a once-a-year calculation to handle on its own. Understanding how each year's distribution affects your tax bracket, Medicare premiums, and broader retirement income strategy gives you a stronger foundation for the decisions ahead. Reviewing your RMDs alongside the rest of your financial picture can help keep your plan aligned with your long-term goals. If you'd like guidance on how RMDs fit into your retirement income strategy, we invite you to schedule a consultation with a Quotient advisor today.
