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Equity Financial Group | Investments | Estate Planning | Insurance

RMDs, explained: what they are, when they start, and how to lower the tax hit

February 9, 2026

What is an RMD?

An RMD is a minimum amount you must withdraw each year from most tax-deferred (non-Roth) retirement accounts after you reach your “RMD age.”

Think of it as the government saying: “You’ve had decades of tax deferral—now it’s time to start recognizing that income.”

When do RMDs start?

Your starting age depends on your birth year:

  • Born 1951–1959: RMDs generally begin at age 73

  • Born 1960 or later: RMDs generally begin at age 75 (this shift takes effect in 2033)

The “still working” exception (big deal for some people)

If you’re past RMD age and still working, you may be able to delay RMDs from your current employer’s plan until you retire if you are not a 5% owner of that company. This exception doesn’t apply to old 401(k)s from previous employers or IRAs—you still must take RMDs from those.

Which accounts have RMDs (and which don’t)?

Usually subject to RMDs

  • Traditional IRA

  • SEP IRA, SIMPLE IRA

  • Workplace plans like 401(k), 403(b), 457(b) and similar plans

Usually NOT subject to RMDs (during the original owner’s lifetime)

  • Roth IRA (original owner)

  • Roth accounts in employer plans (Roth 401(k)/Roth 403(b)): RMDs were eliminated starting in 2024

Note: Beneficiaries who inherit Roth accounts can face required distributions under different rules, but that’s a separate topic.

How is my RMD calculated?

Your RMD is typically:

Prior year-end account value (Dec. 31) ÷ IRS life expectancy factor

The life expectancy factor comes from IRS tables (often the Uniform Lifetime Table for many retirees).

Example (your article’s math, made easy)

If you turn 73 in 2026 and your retirement plan was $750,000 on Dec. 31, 2025, and your factor is 26.5, then:

$750,000 ÷ 26.5 = $28,302 RMD for 2026.

One common “gotcha”: the first-year timing rule

Most years, your RMD is due by December 31. But your first RMD has a special option:

  • You can delay your first RMD until April 1 of the following year

But if you delay it, you’ll have two taxable RMDs in one calendar year (the delayed first one + the second one due by Dec. 31), which can spike your taxes and push you into higher brackets.

If you have multiple accounts, do you need multiple RMD withdrawals?

Usually:

  • IRAs: you calculate each IRA’s RMD, but you can generally take the total from one IRA.

  • 403(b)s: similar aggregation rules may apply.

  • Most other employer plans (like 401(k)s): you typically must take the RMD separately from each plan.

And yes—you can always withdraw more than the required minimum.

How RMDs affect taxes (and why they can feel bigger than expected)

Most RMDs are taxed as ordinary income (except any part that represents after-tax basis, if applicable).

That matters because higher taxable income can trigger a chain reaction, such as:

  • Higher marginal income tax bracket

  • More of your Social Security becoming taxable

  • Higher Medicare premiums (IRMAA thresholds)

  • Reduced deductions/credits in some cases

(Those effects depend on your full tax picture, but they’re common reasons people plan ahead.)

Missed an RMD? Here’s what it can cost.

If you don’t take the full RMD, the IRS can assess an excise tax of:

  • 25% of the amount you failed to withdraw

  • Potentially reduced to 10% if corrected in a timely manner (generally within two years)

This is where Form 5329 often comes into play when fixing mistakes and requesting relief, depending on your situation.

Smart planning moves to reduce future RMD taxes

1) Roth conversions (a “pay taxes now to reduce taxes later” strategy)

A Roth conversion moves money from a traditional retirement account to a Roth account. You pay income tax on the converted amount in the year of conversion, but it may reduce future RMDs because Roth accounts (including Roth IRAs) aren’t subject to RMDs for the original owner.

How to make it more manageable

  • Convert smaller amounts over multiple years

  • Consider converting “up to the top of your current bracket” to avoid jumping into a higher one

  • Coordinate with withholding/estimated tax payments so you don’t get surprised at tax time

2) Use QCDs to satisfy IRA RMDs without increasing taxable income

A Qualified Charitable Distribution (QCD) is a donation sent directly from your IRA custodian to a qualified charity. If done correctly, it can count toward your RMD and be excluded from your gross income (which is often more valuable than a deduction for people who don’t itemize).

For tax year 2026, the QCD limit is $111,000 per person (so a married couple could potentially exclude up to $222,000 if each spouse has eligible IRA assets and does their own QCDs).

A quick “RMD readiness” checklist

  • ✅ Know your RMD age (and whether the still-working exception applies)

  • ✅ Confirm which accounts do and don’t require RMDs (especially Roth 401(k) changes)

  • ✅ Decide whether delaying the first RMD to April 1 helps—or hurts

  • ✅ Plan for taxes: withholding, estimated payments, bracket impact

  • ✅ Consider proactive strategies: Roth conversions and/or QCDs


     

This information is not intended as tax, legal, investment, or retirement advice or recommendations, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek guidance from an independent tax or legal professional. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security.