Why Your First RMD Deserves a Plan
For decades, the IRS has let your IRA or 401(k) grow without asking for a single dollar. Then you turn 73, and the bill comes due.
For a lot of retirees, that bill shows up in December. That’s when custodians get flooded with last-minute withdrawal requests, and a hasty decision can raise your taxes this year and your Medicare premiums two years from now.
If you’re turning 73 in 2026, or you’ve already started taking required minimum distributions, here’s how the rules work, where they tend to trip people up, and what you can do about it.
RMD Basics: What They Are and When They Start
A required minimum distribution, or RMD, is the amount the IRS requires you to withdraw each year from tax-deferred accounts like a traditional IRA, 401(k), or 403(b). You didn’t pay tax on that money going in, so you pay ordinary income tax on it coming out.
Under SECURE 2.0, most people born from 1951 through 1959 begin RMDs at 73. If you were born in 1953, 2026 is your first RMD year. For anyone born in 1960 or later, the starting age shifts to 75.
Your RMD is based on your account balance on December 31 of the prior year, divided by a life expectancy factor from the IRS. At 73, that factor is 26.5 for most people, which works out to a little under 4% of your balance.
For example, an IRA worth $800,000 at the end of 2025 would have a first RMD of about $30,200. Because the factor shrinks every year, the percentage you’re required to take goes up as you get older.
A few rules worth knowing:
- You can generally total your traditional IRA RMDs and take the full amount from one or more of your IRAs.
- Employer plans like 401(k)s generally require their own separate RMD, and 403(b)s have their own aggregation rules.
- If you’re still working and own less than 5% of the company, you may be able to delay RMDs from your current employer’s plan.
- Roth IRAs have no RMDs for the original owner, and since 2024, the same goes for Roth 401(k)s.
Mistake #1: Using the First-Year Extension Without Running the Numbers
Here’s the rule that catches many new retirees off guard. For your first RMD, the IRS gives you extra time: instead of December 31, 2026, you can wait until April 1, 2027.
The catch is that your second RMD is still due by December 31, 2027. Use the extension, and you’ll take two RMDs in the same year, both counted as 2027 taxable income. That can push you into a higher tax bracket and make more of your Social Security taxable.
Waiting isn’t always wrong. If 2026 is a high-income year, perhaps because you worked part of the year or sold a property, pushing that first RMD into 2027 could make sense. Just run the numbers for both years before you decide.
Mistake #2: Overlooking Medicare’s IRMAA Surcharge
IRMAA, the Income-Related Monthly Adjustment Amount, is an extra premium on Medicare Part B and Part D that kicks in once your income passes certain levels. In 2026, the standard Part B premium is $202.90 a month, and the surcharge starts when income tops $109,000 for single filers and $218,000 for married couples filing jointly.
Two things make IRMAA tricky:
- It looks back two years. The RMD you take in 2026 can shape what you pay Medicare in 2028.
- It works like a cliff. Go over a threshold by a single dollar, and you pay the higher premium for the entire year.
That’s why a double-RMD year or a large, unplanned December withdrawal can cost you far more than the income tax alone. If your income dropped because of a qualifying life-changing event, such as retirement, marriage, divorce, or the death of a spouse, you may be able to ask Social Security to reconsider your IRMAA using Form SSA-44.
Mistake #3: Letting RMDs Quietly Grow
This one moves slowly, so it’s easy to miss. Every year the IRS factor gets smaller, so the percentage you must withdraw climbs. If your investments grow too, your RMD can get bigger year after year, whether you need the money or not.
Stack that on top of Social Security, a pension, or investment income, and your taxable income can creep into a higher bracket over time.
There’s a newer wrinkle as well. Through 2028, taxpayers 65 and older can claim an extra deduction of up to $6,000 per person. It begins to phase out once income passes $75,000 for single filers and $150,000 for joint filers, and a larger RMD can eat into it.
If you’re married, plan for the day one of you is on your own. A surviving spouse typically rolls the deceased spouse’s IRA into their own, so the RMDs keep coming, but the survivor now files as single, with lower bracket thresholds and a smaller standard deduction.
Mistake #4: Waiting Until the Last Weeks of December
Waiting until the final couple of weeks leaves very little room if paperwork needs fixing or your custodian gets backed up. Miss the deadline, and the penalty is 25% of the amount you didn’t take, which can drop to 10% if you correct the error within two years.
There’s market risk, too. If stocks are down in December and you have to sell to cover your RMD, you lock in that loss. Setting cash aside for your RMD ahead of time helps, and it’s one reason we pay such close attention to risk with the FSA Safety Net.
Taking your RMD late in the year can still work well. Many retirees take it in December and have taxes withheld from that one withdrawal. The IRS treats withholding as if it were paid evenly throughout the year, which may let you skip quarterly estimated payments. The key is scheduling it well before the holidays.
Strategies to Keep More of What You’ve Saved
Qualified Charitable Distributions (QCDs). Once you’re 70½, you can send money directly from your IRA to a qualified charity. In 2026, you can give up to $111,000 per person this way. A QCD counts toward your RMD and, when completed and reported correctly, is generally excluded from taxable income, which can help with both your tax bracket and IRMAA. If you take the standard deduction, that’s often a better deal than taking the RMD and writing a check.
A few cautions:
- The money must go directly from the IRA to the charity. A donor-advised fund doesn’t qualify.
- Timing matters. You can’t retroactively reclassify a cash withdrawal you’ve already taken as a QCD, so make your QCDs before taking taxable distributions you don’t need.
Roth conversions before 73. If you’re still a few years away, partial Roth conversions in lower-income years can shrink your IRA before RMDs begin. Keep an eye on IRMAA when you do them, and know that once RMDs start, you must take your RMD before converting anything else.
In-kind transfers. If you don’t need your RMD for living expenses, you can move investments directly into a taxable account instead of selling them, so the money stays invested for your longer-term goals.
Frequently Asked Questions
What age do RMDs start under SECURE 2.0?
For most people born from 1951 through 1959, RMDs begin at age 73. If you were born in 1953, 2026 is your first RMD year. For anyone born in 1960 or later, the starting age is 75. RMDs apply to tax-deferred accounts like traditional IRAs, 401(k)s, and 403(b)s.
How is my first RMD calculated?
Your RMD is your account balance on December 31 of the prior year, divided by a life expectancy factor from the IRS. At 73, that factor is 26.5 for most people, a little under 4% of your balance. For example, an $800,000 IRA would have a first RMD of about $30,200.
Can I delay my first RMD until April of the following year?
Yes. Your first RMD can wait until April 1 of the year after you turn 73. However, your second RMD is still due by December 31 of that same year, so you would take two taxable RMDs in one year. That can push you into a higher tax bracket and raise your Medicare premiums through IRMAA.
What happens if I miss an RMD deadline?
The penalty is 25% of the amount you didn’t withdraw, which can drop to 10% if you correct the error within two years. To leave room for paperwork issues or custodian delays, it’s best to schedule your RMD well before the final weeks of December.
Can a Qualified Charitable Distribution count toward my RMD?
Yes. Once you’re 70½, you can send money directly from your IRA to a qualified charity, up to $111,000 per person in 2026. A QCD counts toward your RMD and, when completed and reported correctly, is generally excluded from taxable income. Donor-advised funds don’t qualify.
Do Roth IRAs have required minimum distributions?
No. Roth IRAs have no RMDs for the original owner, and since 2024, the same applies to Roth 401(k)s. That’s one reason some people consider partial Roth conversions in lower-income years before RMDs begin, while keeping an eye on IRMAA.
Bringing It All Together
The April extension can create a double-RMD year. Medicare looks back two years at your income. RMDs tend to grow as you age, and waiting until late December leaves little margin for error. Charitable giving through QCDs, along with planning before 73, can help keep more of your savings working for you.
At FSA, this is all part of our GET Wealth Planning process. We look at your RMDs alongside your taxes, Medicare costs, Social Security, and charitable goals, so a decision in one area doesn’t create a surprise in another.
Turning 73 this year, or want a second opinion on how you’re handling your RMDs now? We’d be glad to sit down with you.
No pressure, just a conversation about where you stand.
- Call us at (301) 949-7300
- Email questions@fsawealthpartners.com
- Visit fsawealthpartners.com
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