EP Wealth Vice President, Advisor, Carrie Sax, CFA, CFP^®, explains what required minimum distributions (RMDs) are, how they're calculated, and strategies like Roth conversions and QCDs that may help manage their tax impact. 

What Are RMDs?

Required Minimum Distributions (RMDs) are the minimum amounts that retirement plan owners must take out of their accounts annually. Your RMD withdrawals are taxed as ordinary income.

Failure to take RMDs can result in significant penalties. Tax-deferred retirement accounts allow you to postpone taxes on your contributions and growth, but the IRS still expects its share eventually. RMDs are how they collect it.

Of course, you can take more than the RMD out of your retirement plan, and many do. However, you don’t have the option of taking less than the RMD.

Factoring in your RMD obligation is a cornerstone of any effective retirement financial plan.

When Must You Take RMDs?

The age at which RMDs begin has shifted over time due to legislative changes, so it's worth confirming the current rules as they apply to you. As of 2026:

• If you were born between 1951 and 1959, your RMD age is 73.
• If you were born in 1960 or later, your RMD age is 75.

Your first RMD must be taken by April 1 of the year following the year in which you reach the applicable age. After that first year, each subsequent RMD is due by December 31.

One important timing consideration: In the year you reach the applicable age, you have a choice: take your first RMD by December 31 of that year, or wait until as late as April 1 of the following year. If you wait, you'll need to take two RMDs in that following year — your delayed first distribution plus that year's regular distribution. That double withdrawal could push you into a higher tax bracket, so it's worth considering the tax impact before deciding to wait.

It's also worth noting that if you are still working and participating in an employer-sponsored retirement plan, you may be able to delay RMDs from that specific plan until after you retire—as long as the plan allows it and you are not a 5% or greater owner of the business. This exception does not apply to IRAs; IRA owners must begin taking RMDs based on age regardless of employment status.

Which Retirement Accounts Are Affected?

Virtually all retirement accounts are subject to RMDs. These include employer-sponsored retirement plans, such as 401(k)s or 403(b)s, as well as traditional IRAs and IRA-based plans, such as SEP-IRAs, SARSEPs, and SIMPLE IRAs.

RMDs do not apply to Roth IRAs or to Roth accounts in employer-sponsored plans such as Roth 401(k)s and Roth 403(b)s during the original account owner's lifetime. However, beneficiaries who inherit a Roth account are still subject to distribution rules.

For tax-deferred accounts that are subject to RMDs, it's worth noting a special rule for spouses. A spouse, unlike any other beneficiary, can transfer the retirement account into their own name after the plan owner's death. Doing so automatically updates the RMDs according to the spouse's date of birth. This means that a surviving spouse who is younger than the deceased owner may be able to leave the money in the retirement account until the year in which they reach their own applicable RMD age.

Accounts Subject to RMDs 

What About Multiple Retirement Accounts?

It's not unusual to have multiple retirement accounts. Generally speaking, to satisfy the RMD for all your accounts, you will first need to calculate the minimum distribution for each one. For traditional IRAs (including SEP and SIMPLE IRAs), you can either take your RMD from each account as calculated, or withdraw the total required amount from the account(s) of your choosing. The same applies if you have multiple 403(b) accounts. However, you cannot combine RMDs across different account types—for example, you cannot use an IRA withdrawal to satisfy a 403(b) RMD, or vice versa.

401(k) plans follow different rules. If you have more than one 401(k), each plan must satisfy its own RMD individually.

How Are RMDs Calculated?

The IRS uses the Life Expectancy Method as its primary calculation of RMD amounts. In its simplest form, you take your account balance as of December 31 of the prior year and divide it by a life expectancy factor published by the IRS.

The IRS publishes three different life expectancy tables, and the one you use depends on your circumstances:

• The Uniform Lifetime Table is used by most retirement account owners. It applies if you are unmarried, or if your spouse is not the sole beneficiary, or if your spouse is the sole beneficiary but is not more than 10 years younger than you.
• The Joint Life and Last Survivor Table applies if your spouse is the sole beneficiary and is more than 10 years younger. This table produces a smaller RMD because it reflects the longer joint life expectancy.
• The Single Life Expectancy Table is used by beneficiaries of inherited retirement accounts.

Because the life expectancy factor decreases each year as you age, your RMD percentage generally increases over time, even if your account balance stays flat.

It's very important to use the correct life expectancy factor when taking your RMD as penalties are stiff. Working with a financial advisor can be a great strategy to avoid a costly mistake.

What Are the Penalties for Not Taking RMDs?

The penalties for missing an RMD are serious. If you don't take your RMD by the deadline, or you don’t take the full amount, the IRS imposes a hefty excise tax of 25% on the amount not withdrawn. For retirees with larger account balances, this penalty could potentially amount to tens of thousands of dollars.

If the missed distribution is corrected promptly and the appropriate form (Form 5329) is filed within the correction window, the penalty may drop to 10%. In some cases, the IRS may waive the penalty entirely if you can demonstrate reasonable cause for the shortfall.

One of the benefits of working with an advisor is that we will calculate the RMD for you, and we'll make sure you take that distribution before the end of the year. 

Roth Conversion Strategy

For those who have not yet reached their RMD age, a Roth conversion strategy may be worth considering. This strategy involves taking some money out of a traditional IRA and converting it into a Roth account. Taxes would be paid in the year the distribution is taken. However, once the funds are in a Roth, they are no longer subject to RMDs. This means that the converted funds can grow tax-free and may be withdrawn tax-free in the future. You can also choose to pass the account on to your beneficiaries, potentially extending the tax-free growth.

The window between retirement and the start of RMDs—which for some people could be a period of several years—is often when taxable income is at its lowest. That can make it an appealing time to convert traditional IRA funds to Roth, since the tax cost of the conversion may be lower than it would be once RMDs and other income sources are in play. However, the right approach depends on a range of variables, including your current and projected tax brackets, the size of your accounts, your other income sources, and your estate planning goals.

Our wealth advisors all take great care to recommend the best course of action around this strategy with your retirement goals in mind.

Qualified Charitable Distributions (QCDs)

For individuals who are charitably inclined, qualified charitable distributions offer one of the more tax-efficient ways to satisfy RMD obligations. A QCD is a direct transfer of funds from a traditional IRA to an eligible charity. The amount transferred counts toward your RMD for the year but is excluded from your taxable income.

To be eligible, you must be age 70½ or older. Notably, this is younger than the current RMD starting age, so you can begin making QCDs before RMDs kick in. For 2026, the annual QCD limit is $111,000 per individual, or $222,000 for a married couple where both spouses qualify and each gives from their own IRA. This limit is adjusted for inflation each year, so it's worth confirming the current figure with your advisor.

While QCDs are not available directly from employer-sponsored plans like 401(k)s, they can generally be made from traditional IRAs, inherited IRAs, and inactive SEP or SIMPLE IRAs.

QCDs have become particularly relevant in 2026, as recent legislative changes have introduced new limitations on itemized charitable deductions for some taxpayers. Because QCDs are excluded from income entirely rather than claimed as a deduction, they bypass those limitations.

How RMDs Can Affect Medicare Premiums

One aspect of RMDs that sometimes catches retirees off guard is their impact on Medicare costs. Medicare Part B and Part D premiums are determined in part by your modified adjusted gross income (MAGI) from two years prior. If your income exceeds certain thresholds, you may be subject to the Income-Related Monthly Adjustment Amount, or IRMAA, which is an additional surcharge on top of the standard premium.

Because RMD income is included in your MAGI calculation, large distributions from retirement accounts can push you past IRMAA thresholds and trigger higher Medicare premiums. For retirees with substantial retirement account balances, this is something to monitor carefully. Strategies like Roth conversions (before RMDs begin) and QCDs (once eligible) may help manage income levels in a way that reduces the likelihood of triggering IRMAA surcharges, though the right approach will depend on your specific financial picture.

Inherited Retirement Accounts and the 10-Year Rule

If you inherit a retirement account from a spouse, you generally have the option of transferring it into your own name and treating it as your own, with RMDs based on your own age.

The rules are different for most non-spouse beneficiaries who inherited a retirement account after December 31, 2019. In these cases, the entire balance must generally be distributed within 10 years of the original owner's death. There are some exceptions—for example, a minor child of the account owner, a disabled or chronically ill individual, or a beneficiary who is not more than 10 years younger than the deceased account owner may still be able to take distributions over their own life expectancy.

If you've inherited an account, it could be important to work with a financial advisor and tax professional to understand your specific tax obligations.

Key Withdrawal Age Milestones

Working With an Advisor

RMDs don't exist in isolation. The way you approach them can affect your tax situation, your Medicare costs, your investment strategy, and your estate plans. Having a financial advisor who understands how all of these pieces fit together can potentially make a difference in how your retirement income holds up over time.

At EP Wealth, our financial advisors can help you build a coordinated approach to retirement income that accounts for both your current needs and longer-term goals. If you have questions about RMDs or how they fit into your broader financial plan, reach out to an advisor to start the conversation.

Disclosures:

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