Required Minimum Distributions (RMDs): How Do They Work?

Percentages rise with age to ensure eventual distribution.

How Much Is the Required Minimum Distribution at Age 72?

Under current law, new RMDs generally begin at 73 or 75, depending on birth year. However, individuals who already started RMDs under prior rules at age 72 will continue with those RMDs.

At age 72, the Uniform Lifetime factor is roughly 27.4, which translates to about a 3.6–3.7% withdrawal rate.

• Example: Balance $1,000,000 → RMD ≈ $36,500

How Much Is the Required Minimum Distribution from a 401(k)?

The basic formula is the same as an IRA: RMD (per plan) = Dec 31 balance ÷ life expectancy factor

Key distinctions:

• Each 401(k), 403(b), or 457(b) generally has its own RMD, which must be paid from that specific plan.
• Many 403(b) plans allow aggregation across 403(b) accounts from different employers, but not with IRAs or 401(k)s.
• If you are still working and not a >5% owner, your current employer’s plan may allow you to delay RMDs from that plan until you retire.

Old 401(k)s from former employers do not get this “still working” exception and remain subject to normal RMD rules.

Key Rules for Required Minimum Distributions

1. Timing of RMDs
   • First RMD: by April 1 of the year after reaching the required age
   • After that, by December 31 yearly
   • Delaying your first RMD can mean two RMDs in one calendar year, which may temporarily increase your tax bill, affect Medicare IRMAA brackets, or cause more Social Security benefits to be taxable.
     
     
2. Penalties for not taking RMDs
   • Excise tax = 25% of the amount you should have withdrawn
   • Potentially reduced to 10% if you correct the shortfall within the allowed time and file the appropriate forms (such as Form 5329) with an explanation.
     
     
3. Aggregation rules
   • IRAs: you may aggregate RMDs across all IRAs and take from one or more IRAs
   • 401(k)s: each account’s RMD is separate
   • 403(b) accounts can be aggregated with each other, but not with IRAs or 401(k)s
     
     
4. Spousal beneficiary exceptions
   • If your spouse is more than 10 years younger than you and is your sole primary beneficiary, you can use the Joint Life and Last Survivor Table, which typically produces smaller RMDs (a longer distribution period).
     
     
5. Inherited accounts
   • SECURE Act requires many non-spouse beneficiaries to empty inherited retirement accounts within 10 years
   • Annual RMDs may be required, depending on the decedent’s death date and the beneficiary’s status.
     
     
6. Still-working exception
   • Applies only to your current employer’s retirement plan, if you are still working and not a >5% owner
     
     

QCDs & Charitable Rules: What’s New in 2025–2026?

Qualified Charitable Distributions (QCDs) are a powerful way for IRA owners to combine RMDs and charitable giving.

A QCD allows you to:

• Give directly from your IRA to a qualified charity,
• Potentially satisfy some or all of your RMD, and
• Keep that distribution out of your taxable income (it doesn’t show up in AGI, and you do not take it as an itemized deduction).
  
  

QCD Basics

• Available once you are age 70½ or older (regardless of your RMD age).
• Must go directly from the IRA custodian to the charity.
• Can only be made from IRAs (not from 401(k)s or 403(b)s directly). You can, however, roll funds from an employer plan to an IRA and then do a QCD in a later year, subject to rollover rules.
  
  

QCD Limits by Year
Per person, under current law:

• 2024: $105,000
• 2025: $108,000
• 2026: $111,000

There is also a once-per-lifetime QCD election to fund certain split-interest charitable vehicles (like charitable gift annuities or charitable remainder trusts) up to a separate, inflation-indexed cap; this amount shares the annual limit in the year it’s used. Because QCDs are excluded from income rather than deducted on Schedule A, they are not affected by many of the new 2026 charitable deduction limitations.

2026 Charitable Deduction Changes You Should Know About

Starting in 2026, new rules will take effect that influence how effective traditional charitable deductions will be:

• 0.5% AGI floor for itemizers: only the portion of charitable gifts that exceeds 0.5% of your AGI will be deductible. The first 0.5% of giving does not provide a Schedule A tax benefit.
• Above-the-line charitable deduction for non-itemizers: up to $1,000 (single) or $2,000 (married filing jointly) for certain cash gifts to public charities.
• 35% cap on deduction benefit for the highest-income taxpayers: those in the 37% bracket are effectively limited to a 35% benefit on charitable deductions.

QCDs bypass all of this because they never hit AGI. For charitably inclined retirees, this makes QCDs an even more important part of RMD planning going into 2026 and beyond.

Common Mistakes with RMDs

• Overlooking older retirement accounts (old 401(k)s, IRAs)
• Waiting until December and missing the deadline or forgetting the first RMD
• Under-withholding taxes and getting surprised at tax time
• Not coordinating RMDs with Social Security, Medicare premium IRMAA, or other sources of income
• Failing to update beneficiary designations, especially for blended families

   

Tax-Smart Strategies for RMD Planning

1. Use Roth Conversions: Convert some traditional retirement funds into a Roth IRA before RMDs begin. This reduces your future RMDs and builds tax-free income.

2. Qualified Charitable Distributions (QCDs)

• At 70½ or older
• In 2026, up to $111,000 from your IRA to charity
• Counts toward your RMD; not included in taxable income
  
  

3. Harvest Lower Tax Brackets Early

Use years with fewer other income sources to pull taxable income from retirement accounts before RMDs hit.


4. Manage Medicare IRMAA & AGI
Larger RMDs can increase your income to a level that raises Medicare-related premiums. Strategic withdrawals, tax planning, and even reclassifying income can mitigate this.

5. Consider Lump Sum vs. Partial Withdrawals
Partial withdrawals from different accounts (IRAs vs 401(k)s) to spread or shift tax burdens; sometimes deferring some RMDs (if allowed) or redirecting to taxable accounts.

6. Get Withholding Right (Form W-4R and Plan Forms)
Use correct withholding from retirement account distributions to avoid underpayment penalties. Coordinated withholding across RMDs, pensions, and Social Security can make tax season much smoother.

7. Consider State Tax Rules
Some states tax retirement income; others do not. Know your state’s treatment. If you’re considering moving (or already splitting time between states), it’s important to integrate state tax rules, residency rules, and RMDs into your long-term plan.

8. Integrate RMDs With Beneficiary & Estate Planning Coordination
Post-SECURE rules often require heirs to empty inherited accounts over a much shorter timeframe (frequently 10 years), which can create “tax bombs” for the next generation.

Consider:

• Reviewing and updating beneficiary designations regularly.
• Whether lifetime Roth conversions, QCDs, or other strategies can help reduce inherited tax burdens.
• How any trusts you’ve named as beneficiaries interact with the latest RMD regulations.

FAQs About RMDs

1. How is the required minimum distribution calculated?
   Your RMD is your retirement account’s December 31 prior-year balance divided by the appropriate IRS life expectancy factor (Uniform Lifetime Table for most owners, Joint Life Table if your spouse is more than 10 years younger and the sole beneficiary).

    

2. When do required minimum distributions begin?
   For most people, the age is 73; for those born in 1960 or later, 75 (beginning in 2033). The first RMD may be delayed until April 1 of the year after reaching the required age.

    

3. What accounts have required minimum distributions?
   Traditional IRAs, SEP IRAs, SIMPLE IRAs, 401(k), 403(b), and 457(b) plans generally have RMDs. Roth IRAs do not require RMDs during the original owner’s lifetime. RMDs from Roth 401(k) and Roth 403(b) accounts were eliminated starting in 2024, so they now follow Roth IRA treatment for the original owner.

    

4. What happens if I miss an RMD?
   An IRS excise tax of 25% applies to the amount not withdrawn. If corrected in time, the penalty may be reduced to 10% under IRS guidance.

    

5. Do QCDs count toward RMDs?
   Yes. If you’re age 70½ or older, you may make a QCD from your IRA to a qualified charity. It counts toward your RMD, but is not included as taxable income. For 2026, the qualifying limit is $111,000.

    

6. Can I aggregate RMDs from multiple accounts?
   IRAs: Yes, you can aggregate RMDs across IRAs and take the total from one or more IRA accounts.
   Employer plans: Generally, no. You must satisfy the RMD separately from each 401(k) or 457(b). Some 403(b)s can be aggregated, but not with IRAs or 401(k)s.