For most of your working life, the deal with a traditional 401(k) or IRA was simple: you didn’t pay tax on the money going in, and you didn’t pay tax on the growth along the way.
The part that got less attention is that the arrangement was always a deferral, not a forgiveness. Eventually the tax comes due, and at a certain age, the government stops waiting for you to decide when.
That’s a required minimum distribution. Once you reach the triggering age, you must withdraw at least a set amount from your traditional retirement accounts each year and pay ordinary income tax on it, whether or not you need the money.
When they start
Required minimum distributions begin at 73 for those born between 1951 and 1959, and at 75 for those born in 1960 or later.
Two deadlines matter:
- Your first RMD can be deferred until April 1 of the year after you reach the triggering age.
- Every RMD after that is due December 31.
That first-year grace period is a trap more often than a gift. Deferring your first distribution to April means taking two distributions in the same calendar year, the deferred one and the current one, stacked on top of each other as income. For most people, taking the first RMD in the year it’s due is cleaner.
How the amount is calculated
Your account balance as of December 31 of the prior year, divided by a life expectancy factor from an IRS table. The factor shrinks as you age, so the required percentage rises each year.
At 73, the factor produces a withdrawal of roughly 3.8% of the balance. By 80, it’s closer to 5%. By 90, around 8%. The obligation grows precisely as many people’s spending needs are flattening out. Try the RMD estimator with your own numbers.
Which accounts count: traditional IRAs, SEP and SIMPLE IRAs, 401(k)s, 403(b)s and most employer plans. Roth IRAs have no RMDs during the owner’s lifetime. Roth 401(k)s no longer require distributions during the owner’s lifetime either, a change that took effect in 2024.
One mechanical quirk: IRAs can be aggregated. Calculate the total across all your IRAs and take it from whichever account you like. Employer plans generally cannot. Each 401(k) needs its own distribution.
The penalty for missing one
It used to be brutally steep. It has been reduced to 25% of the amount you failed to take, and to 10% if you correct the shortfall within the allowed window, generally two years, with the corrective distribution taken and Form 5329 filed.
Lower than it was, still worth avoiding. The most common cause isn’t defiance; it’s an old account at a former employer that nobody was tracking.
The part that catches people: what RMDs do to everything else
The tax on the distribution itself is predictable. The ripple effects are what surprise people.
More of your Social Security becomes taxable. Depending on your combined income, up to 85% of your Social Security benefit can be subject to federal income tax. RMD income pushes you up that scale.
Your Medicare premiums can jump. Medicare is income-tested through IRMAA, the income-related monthly adjustment amount. In 2026, the first surcharge tier begins above $109,000 of modified adjusted gross income for a single filer, or $218,000 for a married couple filing jointly. It works as a cliff: one dollar over a threshold triggers the entire tier.
And it looks back two years. Your 2026 premium is based on your 2024 return. A large distribution or conversion today shows up on a Medicare bill two years from now, which is why this has to be planned forward rather than discovered backward.
A surviving spouse can get hit hardest. When one spouse dies, household income usually falls, because one Social Security benefit stops. But the survivor often files as a single taxpayer the following year, with narrower brackets and a lower IRMAA threshold, while the RMD obligation on the combined accounts continues. Less income, potentially higher rates.
The planning window most people don’t know they have
There’s often a stretch between the day your paychecks stop and the day Social Security and RMDs begin when your taxable income is the lowest it will ever be.
For someone born in 1960 or later, retiring at 65 with RMDs not starting until 75, that window can be a decade long.
That’s where the planning happens. Common approaches include converting portions of a traditional IRA to a Roth while in a low bracket, deliberately filling a tax bracket without spilling into the next one, and sequencing which accounts you draw from in which years. Each one trades a known tax cost today against a larger unknown later.
None of it is a rule of thumb. Whether a conversion helps depends on your current bracket versus your expected future bracket, your IRMAA position two years out, whether you hold both pre-tax and after-tax IRA dollars (the pro-rata rule can make the taxable portion larger than expected), and what you intend to leave to heirs. It’s arithmetic that has to be run on your actual return.
If you give to charity
Qualified charitable distributions let you send money directly from an IRA to a qualified charity, and the 2026 limit is $111,000 per person. The amount counts toward your RMD while staying out of your adjusted gross income entirely, which means it doesn’t inflate the income figure that drives your Social Security taxation or your IRMAA tier.
QCD eligibility begins at age 70½, and that age did not change under SECURE 2.0. So for the group whose RMDs don’t start until 75, there’s a multi-year stretch where QCDs are available before any distribution is required at all.
Three things to do now
- Find every traditional retirement account you own, including ones at former employers. You can’t calculate an obligation across accounts you’ve forgotten.
- Look up your birth year and write down the year your RMDs begin. If there’s a gap between retirement and that year, it’s a planning window, and it has an end date.
- Find the adjusted gross income on your last return. That’s the starting point for any conversation about IRMAA or Roth conversions.
This article is general information, not advice. Nothing here is an accounting, tax, legal or investment opinion or recommendation for your situation. Reading it does not create a client or advisory relationship. Figures cited are for the 2026 tax and benefit year and are drawn from Internal Revenue Service, Social Security Administration and Centers for Medicare & Medicaid Services publications; these amounts are indexed and change annually, and rules are subject to legislative change. Calculations of required distributions, the pro-rata rule and conversion consequences are fact-specific. Before acting, consult your own CPA or tax advisor, your attorney, and your financial professional. Insurance and annuity products are offered by Jorge L. Verar, doing business as JV Financial Services, a licensed Texas insurance agent (License #3035260) appointed through Best Financial Partners LLC; JV Financial Services LLC does not sell insurance.