RMD rules: the IRS's minimum-withdrawal policy, with a reduced but still spicy penalty

By Tom, CPA · Updated October 25, 2026

TL;DR: Required minimum distributions (RMDs) generally start the year you turn 73. Divide each account's prior year-end balance by your Uniform Lifetime Table factor (26.5 at 73). IRAs can be aggregated and taken from any IRA; 401(k)s generally can't. Missing an RMD triggers a 25% excise tax, cut to 10% if corrected within two years.

Educational only, not tax, legal, or investment advice. Examples are illustrations, not predictions. Rules and limits change; verify current figures and talk to a qualified professional about your situation.

The government let you skip taxes on your traditional 401(k) and IRA for decades. At some point it wants its share, and RMDs are that point: a mandatory annual withdrawal whether you need the money or not. Think of it as the IRS knocking on the door of your tax-deferred piggy bank, politely at first, then with a 25% excise tax.

For early retirees, RMDs are far away, but they shape decisions now. Big pre-tax balances can create big RMDs in your 70s, and the years between early retirement and RMD age are the best window to manage that. Here's how the rules work as of 2026.

CPA Warning Label: Your first RMD can be delayed until April 1 of the following year, but then you must take two RMDs in that year, which can push you into a higher bracket.

Starting ages

Your first RMD is due by April 1 of the year after you reach RMD age (your "required beginning date"); every later RMD is due by December 31. The IRS example: reach 73 in 2024, first RMD due by April 1, 2025 (based on the December 31, 2023 balance), and the second by December 31, 2025 (based on the December 31, 2024 balance). Delaying the first one means two taxable RMDs in one year.

Roth IRAs have no RMDs during the owner's life, and since 2024 designated Roth accounts in 401(k) and 403(b) plans don't either.

The Uniform Lifetime Table

Most owners use the Uniform Lifetime Table (Table III in Publication 590-B). The RMD is the December 31 balance of the prior year divided by the factor for your age this year:

If your sole beneficiary is a spouse more than 10 years younger, you use the Joint and Last Survivor Table (Table II), which gives smaller RMDs. Beneficiaries of inherited accounts use the Single Life Table and different rules; see the inherited IRA guide.

Aggregation rules

• IRAs (traditional, SEP, SIMPLE): calculate the RMD separately for each, then you can take the total from any one or more IRAs.
• 403(b)s: calculate separately, then take the total from any one or more 403(b)s.
• 401(k), 457(b) and other plans: each plan's RMD must come from that plan.
• No cross-category mixing: an IRA withdrawal can't satisfy a 401(k) RMD, and vice versa. Inherited IRAs are a separate category from your own.

This is one reason people consolidate before RMD age: fewer plans, fewer separate calculations, fewer chances to miss one. See the consolidation checklist.

Still-working exception

If you're still working at RMD age and participate in your employer's plan, the plan can let you delay RMDs from that plan until April 1 after the year you retire, unless you own more than 5% of the business. This doesn't apply to IRAs, or to plans of former employers. Some people roll old 401(k)s and IRAs into a current employer's plan (if it accepts roll-ins) to extend the exception; check the plan's rules first.

Penalty and correction

If you don't take the full RMD by the deadline, the shortfall is subject to a 25% excise tax, reduced to 10% if you correct it in a timely way (generally within two years). Report it on Form 5329 with your return for the year the RMD was missed.

The IRS can waive the excise tax if the shortfall was due to reasonable error and you're taking steps to fix it. The process: take the missed amount as soon as possible, file Form 5329, attach a letter explaining the error and the correction, and request the waiver. The old 50% penalty is gone, so the stakes are lower than they used to be, but still nobody's idea of a fun April.

Illustration: first RMD year

Illustration (assumptions): Fran turns 73 in 2026. Her traditional IRA balance was $800,000 on December 31, 2025, and she has a separate $200,000 old 401(k).

• IRA RMD for 2026: $800,000 ÷ 26.5 = about $30,189.
• 401(k) RMD for 2026: $200,000 ÷ 26.5 = about $7,547, and it must come from the 401(k).
• If she delays both to April 1, 2027, she'd also owe her 2027 RMDs by December 31, 2027, so about $75,000+ of taxable income in 2027.

Rolling the 401(k) to an IRA before 2026 (after taking any RMD already due) would simplify things to a single aggregated IRA calculation. Note that an RMD itself can't be rolled over.

Why early retirees should care now

• Shrink future RMDs with Roth conversions in low-income years between retiring and Social Security or RMD age.
• Consider IRMAA: big RMDs can raise Medicare premiums, which look back two years at income.
• Qualified charitable distributions: from age 70½, IRA owners can give directly from an IRA to charity, which counts toward the RMD and isn't taxable income.
• Roth 401(k) money no longer has RMDs, so keeping it in the plan or rolling it to a Roth IRA both work.

Planning the decade before RMDs

For someone who retires at 50 and starts RMDs at 75, there are roughly 25 years to shape the pre-tax balance. A simple framework:

1. Project the balance. A $1 million IRA growing at a hypothetical 5% for 25 years with no withdrawals becomes about $3.4 million. Divided by the age-75 factor of 24.6, the first RMD would be about $138,000, before Social Security.
2. Decide the bracket you're willing to pay now. Many early retirees fill the 12% bracket each year with conversions; some go into 22% to avoid larger RMDs later.
3. Coordinate with Social Security timing. The years after retiring but before claiming benefits often have the lowest income of your life.
4. Watch survivor taxes. When one spouse dies, the survivor files as single with the same RMDs, which can push them into higher brackets.
5. Revisit every year as returns, tax law and spending change.

The goal isn't to eliminate RMDs. It's to avoid a future where forced withdrawals are taxed at higher rates than you could have paid voluntarily in your 50s and 60s.

Withholding and timing tips

RMDs can be taken any time during the year, in one lump or monthly. Taking it in December lets the money grow longer but risks a last-minute scramble. Many custodians let you set federal withholding on the RMD, which is treated as paid evenly through the year for estimated-tax purposes, a handy way to cover tax on other income too.

RMDs and the 10% early tax

RMDs themselves are never subject to the 10% early-distribution tax, because by definition you're past 59½. But early retirees sometimes face required distributions much sooner: from an inherited IRA, or under a 72(t) payment plan. Those follow their own rules, which you can read in the 72(t) guide.

Common mistakes

• Using the current year's balance instead of the prior December 31 balance.
• Assuming the custodian will take it automatically.
• Taking an IRA withdrawal to cover a 401(k) RMD.
• Rolling over an RMD amount, which creates an excess IRA contribution.
• Forgetting the year-of-death RMD for an inherited account.
• Delaying the first RMD into a year that already has high income.