Tax Planning | October 16, 2026 | Capstag.com | 9 min read
Required Minimum Distributions: Rules and Deadlines
At a certain age, the IRS stops letting traditional retirement account funds grow tax-deferred indefinitely and requires annual withdrawals, whether the account owner needs the money or not. Missing this deadline carries one of the steepest percentage penalties anywhere in the tax code.
Quick Answer: Required minimum distributions (RMDs) must begin from most tax-deferred retirement accounts at age 73 for those born 1951-1959, and age 75 for those born 1960 or later, under SECURE 2.0 Act rules. The RMD amount is calculated by dividing the account balance as of December 31 of the prior year by a life expectancy factor from the applicable IRS table. The first RMD can be delayed until April 1 of the year following the year the applicable age is reached, but every subsequent RMD is due by December 31 of that year — meaning delaying the first RMD requires taking two distributions in the same calendar year. Missing an RMD triggers an excise tax penalty, reduced to 25% of the shortfall (or 10% if corrected within a specified correction window) under SECURE 2.0.
RMD rules exist because tax-deferred retirement accounts are meant to eventually distribute, and be taxed on, the funds that grew tax-deferred for decades — without a required distribution age, an account could theoretically defer taxation indefinitely. As a finance strategist, the RMD age increases under SECURE 2.0 have created genuine new planning opportunities, giving retirees additional years of flexibility for strategies like Roth conversions before mandatory distributions begin.
The Current RMD Age Schedule
| Birth Year | RMD Starting Age |
|---|---|
| Born 1950 or earlier | Already subject to RMDs under prior rules |
| Born 1951 – 1959 | 73 |
| Born 1960 or later | 75 |
This represents the second increase to the RMD age under recent legislation — the original SECURE Act raised the age from 70½ to 72, and SECURE 2.0 raised it further to 73, with a scheduled additional increase to 75 for those born in 1960 or later. Each increase has provided additional years during which tax-deferred accounts can continue growing without mandatory withdrawal.
Calculating Your RMD Amount
Worked example: An account with a $500,000 balance as of December 31 of the prior year, and a life expectancy factor of 25.5 (a commonly cited factor from the IRS Uniform Lifetime Table for a specific age), produces an RMD of $500,000 ÷ 25.5 ≈ $19,608 for the year. The life expectancy factor decreases as age increases, meaning the required percentage withdrawal grows larger in later years, even if the account balance stays flat.
Multiple Accounts Require Separate Calculations but Can Sometimes Be Combined for Withdrawal: For an individual with multiple traditional IRAs, the RMD must be calculated separately for each IRA, but the total RMD amount can generally be withdrawn from any single IRA or combination of IRAs, rather than requiring a separate withdrawal from each specific account. Workplace retirement plans like 401(k)s generally require the RMD for each specific plan to be withdrawn from that specific plan, rather than allowing the same combination flexibility IRAs offer — a distinction that matters for anyone holding both IRA and workplace plan balances.
The First-Year Delay Option and Its Trap
The first RMD can be delayed until April 1 of the year following the year the applicable RMD age is reached — but every subsequent RMD, including the second one, remains due by December 31 of its respective year. This creates a specific trap: an account owner who delays their first RMD until the following April 1 must still take their second RMD by December 31 of that same calendar year, resulting in two full RMDs being taxed within a single tax year.
Why the Delay Option Often Backfires: Taking two RMDs in a single calendar year can push a retiree into a meaningfully higher tax bracket for that year compared to spreading the two distributions across two separate tax years, since both distributions are taxed as ordinary income in the same year they are received. Unless there is a specific reason to delay — such as an unusually low-income first year that would make combining both distributions in the second year genuinely more tax-efficient — taking the first RMD in the actual year it becomes due, rather than delaying to the following April, often produces a better overall tax outcome.
Roth Accounts and RMDs
Roth IRAs have never been subject to RMDs during the original owner's lifetime. Under a relatively recent change, designated Roth accounts within 401(k) and 403(b) plans are also no longer subject to RMDs while the original account holder is alive, aligning their treatment with Roth IRAs — a meaningful simplification for anyone holding a Roth 401(k) balance, who previously had to either take RMDs from that account or roll it into a Roth IRA specifically to avoid them. Inherited Roth accounts, however, remain subject to distribution rules for beneficiaries, even though the original owner faced no RMD requirement.
The Penalty for Missing an RMD
SECURE 2.0 reduced the excise tax penalty for a missed or insufficient RMD from the historical 50% of the shortfall to 25%, with a further reduction to 10% available if the shortfall is corrected within a specified correction window — typically by the end of the second year following the year the RMD was missed, though the precise correction window should be confirmed against current IRS guidance. Even at the reduced rates, this remains one of the steepest percentage penalties in the entire tax code, making RMD compliance a genuinely high-stakes deadline rather than a minor administrative detail.
| Scenario | Penalty Rate |
|---|---|
| RMD missed, corrected within the specified window | 10% of the shortfall |
| RMD missed, not corrected within the window | 25% of the shortfall |
| Prior to SECURE 2.0 (historical rate) | 50% of the shortfall |
Using Qualified Charitable Distributions to Offset an RMD
For donors aged 70½ or older — an age that is separate from and earlier than the RMD starting age itself — a qualified charitable distribution sent directly from an IRA to a qualifying charity can count toward satisfying that year's RMD requirement while excluding the distributed amount from taxable income entirely, combining charitable giving with RMD satisfaction in a single, tax-efficient transaction. This strategy, covered in more detail in our charitable giving guide, is particularly valuable for a retiree who does not need the full RMD amount for living expenses and has charitable giving intentions regardless.
QCD Eligibility Age Differs From RMD Age: Because the QCD eligibility age (70½) is now earlier than the RMD starting age (73 or 75) for most current retirees, a QCD can be used starting at 70½ even though it is not yet required to satisfy an RMD, since no RMD exists until the applicable later age. Once RMDs do begin, QCDs made in that year count directly toward satisfying the RMD requirement, up to the applicable annual QCD limit.
From a Risk Management Perspective: The years between retirement and the start of RMDs — now extended further by the SECURE 2.0 age increases — represent a valuable planning window for strategies like Roth conversions, since income in these years is often lower than during peak earning years and lower than it will be once mandatory RMDs begin adding to taxable income. Reviewing this window specifically as an opportunity, rather than simply waiting for RMDs to begin, can meaningfully reduce lifetime tax liability for retirees with substantial traditional account balances.
Conclusion
Required minimum distributions begin at age 73 or 75 depending on birth year under current SECURE 2.0 rules, calculated by dividing the prior year-end account balance by an IRS life expectancy factor, with the first distribution eligible for delay until the following April — though this delay often creates a worse tax outcome by combining two distributions into a single tax year. Roth IRAs and, under a recent change, designated Roth 401(k) and 403(b) accounts face no RMD requirement during the original owner's lifetime, and qualified charitable distributions offer a tax-efficient way to satisfy an RMD while supporting charitable giving. The penalty for a missed RMD, even after reduction under SECURE 2.0, remains steep enough to warrant careful annual compliance. For the broader retirement planning context, see our Retirement Calculator guide.
✅ Key Takeaways
- RMDs begin at age 73 for those born 1951-1959, and age 75 for those born 1960 or later, under current SECURE 2.0 rules
- The RMD amount is calculated by dividing the prior year-end account balance by an IRS life expectancy factor, with the required percentage increasing as age increases
- The first RMD can be delayed until April 1 of the following year, but this requires taking two RMDs in that same calendar year, often producing a worse tax outcome than taking the first RMD on time
- Roth IRAs and, under a recent change, designated Roth 401(k) and 403(b) accounts face no RMD requirement during the original owner's lifetime
- The penalty for a missed RMD was reduced under SECURE 2.0 to 25% of the shortfall, or 10% if corrected within a specified window, down from a historical 50%
- Qualified charitable distributions, available starting at age 70½, can satisfy an RMD requirement while excluding the distributed amount from taxable income entirely
- The years between retirement and the start of RMDs represent a valuable window for Roth conversions and other income-sensitive planning, since income is often lower during this period
Frequently Asked Questions
At what age do I need to start taking required minimum distributions?
Under current SECURE 2.0 rules, RMDs begin at age 73 for those born between 1951 and 1959, and age 75 for those born in 1960 or later. These ages reflect two separate increases from the original 70½ starting age under earlier legislation.
How do I calculate my required minimum distribution?
Divide your retirement account balance as of December 31 of the prior year by the applicable life expectancy factor from the IRS Uniform Lifetime Table for your age. A $500,000 balance with a 25.5 factor produces an RMD of approximately $19,608 for the year.
What happens if I delay my first RMD until the following April?
You must still take your second RMD by December 31 of that same calendar year, meaning two full RMDs are taxed within a single tax year. This often results in a higher overall tax bill for that year compared to taking the first RMD on time in the year it becomes due.
Do Roth accounts require RMDs?
Roth IRAs have never required RMDs during the original owner's lifetime. Under a relatively recent change, designated Roth accounts within 401(k) and 403(b) plans are also no longer subject to RMDs while the original account holder is alive. Inherited Roth accounts remain subject to beneficiary distribution rules.
What is the penalty for missing a required minimum distribution?
SECURE 2.0 reduced the excise tax penalty from a historical 50% of the shortfall to 25%, with a further reduction to 10% available if the shortfall is corrected within a specified window, typically by the end of the second year following the missed RMD. Even at the reduced rate, this remains one of the steepest percentage penalties in the tax code.
This article is for educational purposes only. The information provided reflects general financial principles and does not constitute personalised financial, tax, or legal advice. RMD ages, factors, and penalty rules change periodically — always verify current figures against official IRS guidance. Always consider your own financial circumstances before making any decisions.
