A traditional 401(k) or IRA is a deal, not a gift. You put money in before tax, the balance grows without a tax bill each year, and the government waits. Required minimum distributions are the government collecting. At a certain age you have to pull a set amount out of those accounts every year and pay ordinary income tax on it, whether or not you need the money to live on.
The scale of what is waiting explains why the rule exists. Americans held $49.1 trillion in retirement accounts at the end of 2025, according to the Investment Company Institute, and IRAs alone held $19.2 trillion, most of it rolled over from workplace plans. Almost none of that has been taxed yet.
When the clock starts
The SECURE 2.0 Act moved the starting age twice. If you were born between 1951 and 1959, your first required distribution is due for the year you turn 73. If you were born in 1960 or later, you get until 75. Anyone born in 1953 turns 73 during 2026, which makes this their first RMD year.
The deadline for that first one is not December 31. It is April 1 of the following year, a grace period the IRS grants exactly once. Every distribution after that is due by December 31 of its own year.
That grace period has teeth. If you turn 73 in 2026 and wait until March 2027 to take your first distribution, your second one is still due by December 31, 2027. Two taxable withdrawals land in the same calendar year, stacked on top of each other. For someone near the top of the 22 percent bracket, that can push part of the money into 24 percent, raise the share of Social Security that gets taxed, and show up two years later as a higher Medicare premium, since Medicare’s income surcharge looks back at your tax return from two years earlier. Taking the first RMD in the year you turn 73 rather than deferring it is usually the cheaper choice, but it depends on what else is in your income that year.
How the number is calculated
The formula is simple arithmetic. Take the account balance as of December 31 of the previous year and divide it by a life expectancy factor from the IRS Uniform Lifetime Table. At age 73 the factor is 26.5. So a $500,000 IRA balance on December 31, 2025 produces a 2026 distribution of about $18,868.
The factor shrinks every year, which means the required percentage climbs as you age. At 73 you are taking roughly 3.8 percent of the balance. By your mid-80s the table pulls closer to 7 percent, and by the mid-90s it is well into double digits. Market returns can outrun that for a while, which is why plenty of people take RMDs for a decade and watch their balance stay flat or grow.
Your custodian will usually calculate the figure for you and print it on a statement in January. The calculation is still your legal responsibility. If the balance included a rollover in transit at year end, or you changed custodians, the number on the statement can be wrong.
Which accounts you can combine, and which you cannot
This is where most mistakes happen. Traditional IRAs, SEP IRAs and SIMPLE IRAs are calculated separately but satisfied together. You add up the required amounts across all of them and take the total from any single account, which is handy when one holds cash and another holds something you would rather not sell.
Employer plans do not work that way. Each 401(k) has to be calculated and distributed on its own. Taking extra from your IRA does nothing for a 401(k) sitting at a former employer. Someone with two old 401(k)s and an IRA has three separate obligations, and consolidating those old plans into one IRA before RMD age removes the trap entirely. The 403(b) rules sit in the middle: those can be aggregated with each other, but not with IRAs or 401(k)s.
There is an exception for people still working. If you are employed past your RMD age by the company that sponsors your current 401(k), and you own 5 percent or less of that company, that plan’s distributions can wait until April 1 of the year after you retire. The exception applies to that plan only. Your IRAs and your old employers’ plans are still on the normal schedule.
Roth accounts are the clean part of the story. A Roth IRA has never required distributions during the owner’s lifetime. Roth 401(k)s and other designated Roth accounts used to, and SECURE 2.0 ended that starting in 2024. Money in a Roth stays put as long as you want it to.
What happens if you miss one
The penalty used to be brutal: 50 percent of whatever you failed to withdraw. SECURE 2.0 cut it to 25 percent, and to 10 percent if you fix the shortfall within a two-year correction window by taking the missed amount and filing the paperwork.
The paperwork is Form 5329. It is also how you ask for the penalty to be waived entirely. The standard is reasonable error plus prompt correction, and the IRS grants these routinely when someone missed a distribution because a spouse died, a custodian changed hands, or an account was simply forgotten. You take the money out, attach a short statement explaining what happened and what you did about it, and in most cases that is the end of it. Missing an RMD is a problem worth fixing immediately and not one worth panicking over.
The IRS keeps its own plain-language summary of the rules on its RMD page, and it is worth reading once rather than relying on what a neighbor told you.
Ways to make the bill smaller
You cannot skip a distribution, but you have some say over how it is taxed.
If you are charitably inclined and at least 70 and a half, a qualified charitable distribution sends money straight from your IRA to a qualifying charity. It counts toward your RMD and never appears in your adjusted gross income, which is better than taking the money and claiming a deduction. The 2026 cap is $111,000 per person, up from $108,000 in 2025 now that the limit is indexed to inflation, with a separate one-time limit of $55,000 for gifts to a split-interest vehicle like a charitable gift annuity.
You do not have to sell anything to satisfy an RMD. An in-kind distribution moves shares from the IRA to a taxable brokerage account. You still owe income tax on the value transferred, but you stay invested and you are not forced to sell into a bad market.
Withholding is the quiet tool. Tax withheld from a retirement distribution is treated as paid evenly across the year regardless of when it actually comes out, so a December RMD with generous withholding can cover a tax bill created in March. Retirees who dislike quarterly estimated payments often use one large December distribution to handle the entire year.
The bigger lever comes earlier. The years between retirement and 73, when earned income has stopped and RMDs have not started, are usually the lowest-tax years of someone’s life. Converting part of a traditional IRA to a Roth during that window shrinks the balance the table will eventually divide, and moves the money somewhere that will never be divided again. That decision turns on your bracket now versus later, and it is worth running with a tax professional before you commit.
The distribution itself is not the problem. Being surprised by it is.