Required Minimum Distributions (RMDs) are mandatory annual withdrawals from most pre-tax retirement accounts once you reach your required starting age. For most retirees, that age is 73 if you were born between 1951 and 1959, and 75 if you were born in 1960 or later.
Because RMDs are generally taxed as ordinary income, they can push you into a higher tax bracket, raise the taxable portion of your Social Security, and increase your Medicare premiums if you do not plan ahead. With the right preparation, most of those surprises are avoidable. This guide explains how RMDs work, which accounts they apply to, and how smart planning before your first RMD can protect your retirement income as part of a broader retirement planning strategy.
Key Takeaways
- Traditional IRAs, SEP IRAs, SIMPLE IRAs, and many employer plans (like 401(k)s) typically have RMD rules.
- Roth IRAs have no lifetime RMDs for the original owner, and SECURE 2.0 eliminated lifetime RMDs for Roth accounts in employer plans starting in 2024.
- Proactive withdrawals or Roth conversions in the years before RMDs begin can reduce the size of future forced distributions.
- Adding RMD income on top of other income can increase how much of your Social Security is taxable and can trigger Medicare IRMAA surcharges.
What Are RMDs and Which Accounts Do They Apply To?
RMDs are the IRS’s way of making sure tax-deferred retirement savings are eventually taxed. If contributions went in pre-tax, or the growth has never been taxed, you must begin taking minimum withdrawals once you reach the required age.
RMD rules generally apply to traditional IRAs, SEP IRAs, SIMPLE IRAs, and many employer retirement plans such as 401(k)s. One important nuance is that some workplace plans allow you to delay RMDs if you are still working past the required age, often called the “still working” exception. Special rules and exceptions apply, and certain owners (such as those who own more than 5% of the business) may not qualify.
How RMDs Are Calculated in Plain English
In most cases, your annual RMD depends on two things: your account balance on December 31 of the prior year, and a life expectancy factor from IRS tables (most people use the Uniform Lifetime Table).
For example, the Uniform Lifetime Table factor at age 73 is 26.5. A rough estimate is your prior year-end balance divided by 26.5. Exact calculations can differ, especially if a spouse is the sole beneficiary and significantly younger, so it is worth confirming your number before you withdraw.
Accounts Without Lifetime RMDs
Roth IRAs
Roth IRAs do not require RMDs during the original owner’s lifetime, which can provide long-term tax flexibility and make them a useful tool in your broader estate planning strategy.
Roth 401(k)s and Other Roth Employer-Plan Accounts
SECURE 2.0 eliminated lifetime RMDs for Roth employer-plan accounts beginning in 2024 for the original owner. That change brought Roth 401(k)s closer in line with Roth IRAs and gave retirees more flexibility when planning long-term withdrawals.
Why RMDs Can Increase Taxes and Trigger Domino Effects
An RMD is a forced income event that stacks on top of your other income instead of replacing it. That is why RMDs often affect more than just your tax return. A strong tax planning approach accounts for these ripple effects before your first required withdrawal.
1. Higher Tax Brackets
Because RMDs are generally taxable, they can raise your effective tax rate and reduce your take-home income, especially when combined with pensions, Social Security, or other taxable income sources.
2. More Social Security Becomes Taxable
This one surprises many retirees. Social Security taxation depends on your overall income picture, so when RMDs raise your taxable income, they can also increase the portion of your Social Security benefits that is taxed.
3. Higher Medicare Costs (IRMAA)
Medicare premiums are income-based. For 2026, the first IRMAA threshold applies when your 2024 income exceeds $109,000 (single) or $218,000 (joint), using a two-year lookback. A coordinated healthcare planning approach helps you avoid crossing those thresholds by accident.
Ways Retirees Often Plan Ahead
Roth Conversions, When Appropriate
A Roth conversion moves money from a traditional IRA to a Roth IRA, creating taxable income today in exchange for tax-free growth later. Future Roth growth and qualified withdrawals can be tax-advantaged, which makes conversions a powerful long-term tool.
This strategy is often considered in the window after retirement but before RMDs begin, when taxable income may be lower. Because conversion amounts can affect tax brackets and Medicare IRMAA, they usually work best as part of a coordinated, year-by-year income planning strategy. For a deeper look, see our guide to a tax-efficient withdrawal strategy.
Qualified Charitable Distributions (QCDs)
A Qualified Charitable Distribution (QCD) is a direct transfer from an IRA to a qualified charity that can count toward your RMD and is generally excluded from your taxable income. You must be age 70½ or older to make one.
When done correctly, a QCD satisfies part or all of your RMD, keeps the distribution out of your adjusted gross income, and helps manage both taxes and Medicare premium exposure at the same time. QCDs are especially useful if charitable giving is already part of your retirement plan.
What Happens If You Miss Your RMD?
Missing an RMD can be costly. The IRS may assess an excise tax of 25% of the amount that was not withdrawn, reduced to 10% if the mistake is corrected within two years. Correcting the error typically involves filing Form 5329 with your tax return.
If you realize you missed an RMD, act quickly. The reduced penalty and a reasonable-cause explanation give most retirees a path to fix the issue without paying the full excise tax.
FAQs
RMDs generally begin at the required age. Many retirees start at 73, with the starting age increasing to 75 for those born in 1960 or later when they reach eligibility.
Traditional IRAs, SEP IRAs, SIMPLE IRAs, and many employer plans generally have RMD rules. Roth IRAs do not have lifetime RMDs for the original owner, and Roth employer accounts no longer require lifetime RMDs starting in 2024.
Yes. Higher income can trigger IRMAA surcharges for Part B and Part D, and Medicare generally uses a two-year income lookback to set those premiums.
Yes. You cannot put an RMD back into the same tax-deferred account, but you can invest it in a taxable brokerage account or, if you have earned income, contribute to another eligible account. Reinvesting keeps the money working even if you were required to withdraw it.
Often, yes. RMDs change your cash flow and your taxable income, which can affect how much risk you should carry. Our guide on whether to adjust your portfolio in retirement walks through what to review first.
Want to Avoid RMD Surprises Before They Hit?
RMD planning works best in the years before your first required withdrawal, not after. Early action gives you room to use Roth conversions, QCDs, and bracket management before the rules take that flexibility away.
If you are still several years from retirement, our retirement planning checklist is a helpful next step. If RMDs are already on the horizon, now is the time to build a coordinated plan.
At Bauman Wealth Advisors, our CFP® professionals can help you map a tax-aware strategy that coordinates Social Security timing, Roth planning, and future RMD impact. Review your retirement income strategy with us to turn the rules into a clear, year-by-year plan you can follow with confidence.
