How to Navigate Required Minimum Distributions After 73

14 October 2026

Required Minimum Distributions, or RMDs, are one of the few retirement rules that come with a hard deadline and a genuine financial penalty for getting them wrong. Since the SECURE 2.0 Act pushed the starting age to 73 for most people, a lot of retirement account owners have had to recalibrate their withdrawal plans. Some gained an extra year or two of tax deferral. Others discovered that the delay simply shifted a larger tax bill further down the road. Either way, the mechanics of RMDs have not become simpler. If anything, the rules have grown more layered, and the cost of misunderstanding them has not shrunk.

This article walks through how RMDs actually work after 73, where people tend to go wrong, and how to build a withdrawal strategy that treats the requirement as part of a broader tax plan rather than an annual chore.

What an RMD Actually Is

An RMD is the minimum amount you must withdraw from certain tax-deferred retirement accounts each year once you reach your required beginning date. It is not a suggestion, and it is not optional. The IRS requires it because these accounts have never been taxed. You contributed pre-tax dollars, the money grew tax-deferred, and at some point the government wants its share. The RMD is the mechanism that forces that reckoning.

The key word is "minimum." You can always take more. You cannot take less without triggering a penalty. And the penalty is steep: 25 percent of the amount you should have withdrawn but did not, reduced to 10 percent if you correct the shortfall within a specific correction window and file the appropriate form. That correction window generally runs until the end of the second year following the year the missed distribution occurred, but relying on it is a bad plan. Fixing an error is not the same as avoiding one.

Which Accounts Are Subject to RMDs

Not every retirement account follows the same rules. This is one of the first places people get confused.

Traditional IRAs, SEP IRAs, and SIMPLE IRAs are all subject to RMDs once you reach your required beginning date. So are 401(k), 403(b), and most governmental 457(b) plans.

Roth IRAs are not subject to RMDs during the owner's lifetime. That is a meaningful advantage, and it is one reason Roth conversions get so much attention in retirement planning. However, Roth 401(k) accounts historically were subject to RMDs, and the SECURE 2.0 Act eliminated that requirement starting in 2024. If you have a Roth 401(k) and your plan document has not caught up, check with your plan administrator, because the elimination applies to plan years beginning after December 31, 2023.

Designated Roth accounts inside 403(b) plans also received relief under the same legislation. The practical takeaway: Roth money is generally the most flexible bucket in your portfolio because it does not force distributions, which makes it a powerful tool for managing taxable income in any given year.

When RMDs Begin

For most people, the required beginning date is April 1 of the year following the year you turn 73. If you turn 73 in 2025, your first RMD is for the 2025 tax year, but you have until April 1, 2026, to take it.

That delay sounds generous, and it can be. But it comes with a trap. If you postpone your first RMD into the following year, you will take two distributions in that same calendar year: the delayed first one plus the second one that is due by December 31. That can push you into a higher marginal tax bracket, increase your Medicare income-related monthly adjustment amount, and affect the taxation of Social Security benefits. For many retirees, taking the first RMD in the year they turn 73 is the cleaner choice even though the law allows a delay.

There is an exception for people still working. If you are employed and participating in a workplace retirement plan such as a 401(k), and you are not a 5 percent owner of the business, that plan may allow you to defer RMDs until you actually retire. This exception does not apply to IRAs. If you own a traditional IRA, RMDs begin at 73 regardless of whether you are still working.

How the Amount Is Calculated

The RMD for each account is calculated by dividing the account balance as of December 31 of the prior year by a life expectancy factor from the IRS Uniform Lifetime Table. That table applies to most account owners. If your sole beneficiary is your spouse and that spouse is more than 10 years younger than you, you use the Joint Life and Last Survivor Expectancy Table, which produces a smaller required distribution because it stretches the payout over two lives.

Here is a simple example. Suppose your traditional IRA was worth 500,000 dollars on December 31 of last year, and you turn 75 this year. The Uniform Lifetime Table factor for age 75 is 24.6. Divide 500,000 by 24.6, and your RMD is approximately 20,325 dollars. You can take more, but you must take at least that much.

A few details matter here. First, the factor decreases as you age, which means the percentage you must withdraw rises over time. At 73, the factor is 26.5, so the required percentage is roughly 3.8 percent. By 85, the factor drops to 16.0, pushing the required percentage above 6 percent. By 95, it is above 10 percent. This is why RMDs become a bigger tax issue later in life even if your portfolio does not grow at all.

Second, each IRA is calculated separately, but you can aggregate the RMDs from multiple IRAs and take the total from any one or combination of them. That flexibility does not extend to 401(k) plans. Each 401(k) must satisfy its own RMD, and you cannot use one plan's distribution to cover another plan's requirement.

Third, the December 31 valuation date means market movements in the current year do not change this year's RMD. A market crash in January does not reduce your required withdrawal. That can feel unfair, but it is how the rule works. It is also why some advisors recommend taking RMDs early in the year to reduce exposure, while others prefer to wait and let the money grow longer. Both approaches have merit, and the right answer depends on your cash flow needs and market outlook.

The Aggregation Rules in Plain Terms

Aggregation is one of the most useful and most misunderstood features of RMD planning.

For IRAs, you can total the RMDs from all your traditional, SEP, and SIMPLE IRAs and take the entire amount from one account. This is genuinely helpful if one IRA holds assets you would rather not sell. You can satisfy the requirement from a different IRA that holds cash or assets you are happy to liquidate.

For 401(k) plans, no such flexibility exists. Each plan calculates and requires its own distribution. If you have three 401(k) accounts from three former employers, you have three separate RMDs. This is a strong argument for consolidating old 401(k) accounts into a single IRA, because it simplifies the calculation and gives you aggregation flexibility.

One caution: if you are still working and using the still-working exception for your current employer's plan, rolling that plan into an IRA would forfeit the exception. Do not consolidate blindly.

The Tax Consequences Nobody Enjoys Discussing

RMDs are taxed as ordinary income. There is no capital gains treatment, no special rate, and no exemption. The distribution is added to your adjusted gross income, which can trigger a cascade of secondary effects.

Higher AGI can increase the taxable portion of your Social Security benefits. It can push you past thresholds for the Medicare income-related monthly adjustment amount, which raises your Part B and Part D premiums. It can reduce or eliminate deductions and credits that phase out with income. It can also affect the net investment income tax if your income crosses the applicable threshold.

This cascade is why the real cost of an RMD is often higher than the marginal tax rate alone suggests. A retiree in the 22 percent bracket might effectively pay 30 percent or more once Medicare surcharges and Social Security taxation are factored in. That is not a reason to avoid RMDs, since you cannot avoid them, but it is a reason to plan around them.

Qualified Charitable Distributions: The Most Underused Tool

A Qualified Charitable Distribution, or QCD, allows you to send money directly from an IRA to a qualified charity. If you are 70 and a half or older, you can do this. The distribution counts toward your RMD if you have one, and it is excluded from your taxable income.

The exclusion is the key benefit. A charitable deduction only helps if you itemize, and many retirees take the standard deduction. A QCD reduces your AGI directly, which can lower Medicare premiums, reduce Social Security taxation, and preserve other income-sensitive benefits. For charitably inclined retirees, this is often the single most efficient way to satisfy an RMD.

The annual limit on QCDs is indexed for inflation, and it applies per person, not per account. A married couple can each make QCDs from their own IRAs. The transfer must go directly from the IRA to the charity. If you take the distribution yourself and then write a check, it does not qualify.

One nuance: QCDs are not allowed from 401(k) plans, 403(b) plans, or SEP IRAs that are still receiving contributions. They must come from an IRA, and the IRA must be one from which a distribution would otherwise be taxable.

The Still-Working Exception and Its Limits

The still-working exception sounds like a loophole, and for some people it is a legitimate planning opportunity. If you are 73 and still working for an employer whose plan permits the exception, and you do not own more than 5 percent of the business, you can delay RMDs from that specific plan until you retire.

The limits are important. The exception applies only to the plan of the employer you are currently working for. It does not apply to IRAs, and it does not apply to plans from former employers. If you have a 401(k) from a previous job, RMDs from that account begin at 73 regardless of your employment status.

There is also a practical consideration. Delaying RMDs from a current employer plan means the balance keeps growing tax-deferred, but it also means a larger required distribution later, likely concentrated over fewer years. For some people, that trade-off is worth it. For others, it simply defers a tax bill that will be larger when it arrives. Run the numbers before assuming the delay is automatically beneficial.

Common Mistakes and How to Avoid Them

The most common mistake is missing the deadline. RMDs must be taken by December 31 each year, except for the very first one, which can be delayed to April 1 of the following year. Missing the deadline triggers the penalty, and while the penalty can be reduced on correction, the process is inconvenient and not guaranteed.

A second mistake is forgetting that each 401(k) has its own RMD. People who consolidate IRAs correctly assume they can do the same with 401(k) accounts. They cannot.

A third mistake is failing to account for RMDs in tax withholding. RMDs are taxable, and if you do not withhold enough, you may face an estimated tax penalty. You can elect withholding on the distribution, or you can make quarterly estimated payments. Withholding is usually simpler.

A fourth mistake is ignoring the impact on a surviving spouse. When one spouse dies, the surviving spouse can generally roll the deceased spouse's IRA into their own, which resets the RMD calculation to their own age. But if the beneficiary is not a spouse, the rules are different and often more restrictive. Naming beneficiaries correctly and reviewing them regularly is essential.

A fifth mistake, and one that is growing more common, is assuming the SECURE Act's 10-year rule applies uniformly to non-spouse beneficiaries. In many cases, designated beneficiaries must empty the inherited account within 10 years, and if the account owner died after their required beginning date, the beneficiary may also need to take annual distributions during that period. The rules here are technical, and getting them wrong can be costly.

Strategies to Reduce the Long-Term RMD Burden

You cannot avoid RMDs from tax-deferred accounts, but you can reduce them. The most effective strategy is to shrink the balance before RMDs begin.

Roth conversions are the primary tool. By converting traditional IRA dollars to Roth, you pay tax now at a known rate and remove those dollars from future RMD calculations. The converted amount grows tax-free, and Roth IRAs have no lifetime RMDs. The trade-off is that conversions increase your taxable income in the year you make them, which can trigger the same Medicare and Social Security effects discussed earlier. The best conversions are usually done in the years between retirement and age 73, when your income may be lower and you have room in your tax brackets.

Partial conversions spread over several years often work better than a single large conversion. They smooth the tax impact and reduce the risk of crossing a threshold that raises your Medicare premiums.

Another strategy is to spend down traditional IRA assets first and preserve Roth assets for later. This reduces the balance subject to RMDs and leaves the most flexible assets for your heirs. The logic is straightforward: if you are going to pay tax on the money eventually, it often makes sense to pay it at a lower rate now and let the tax-free account compound.

A third approach is to use QCDs consistently once you reach 70 and a half. If you are charitably inclined, directing IRA dollars to charity reduces your taxable RMD and your AGI at the same time.

RMDs and Your Broader Retirement Plan

RMDs are not just a tax event. They are a cash flow event. The money comes out of your portfolio whether you need it or not, and if you do not need it, you have to decide what to do with it.

Some retirees reinvest the after-tax proceeds in a taxable brokerage account. That can work, but it means the money is now subject to capital gains and dividend taxation, and it may be included in your estate. Others use the distribution to fund living expenses, which is the simplest approach. Still others use it to make gifts, fund a 529 plan, or pay down debt.

The decision should align with your overall plan. If your goal is to leave a legacy, you may want to preserve Roth assets and spend traditional IRA dollars first. If your goal is to minimize lifetime taxes, you may want to accelerate distributions in lower-income years. If your goal is to protect a surviving spouse, you may want to consider the tax brackets they will face as a single filer, which are less favorable than married filing jointly brackets.

What to Do Before December 31

A practical checklist helps. Confirm your required beginning date and whether you qualify for the still-working exception. Calculate each account's RMD separately. Decide which accounts to draw from, using aggregation where allowed. Consider a QCD if you are charitably inclined and 70 and a half or older. Review your withholding or estimated payments. Check your beneficiary designations. And if you have already taken a distribution, verify that it satisfies the requirement before the year ends.

If you have multiple accounts and a complex situation, working with a tax professional or financial advisor who specializes in retirement distributions is worth the cost. The penalty for a missed RMD is avoidable, and the tax savings from a well-timed conversion or QCD can be substantial.

The Bottom Line

RMDs after 73 are not complicated in concept, but they are unforgiving in execution. The rules reward planning and punish neglect. Understanding which accounts are subject to RMDs, how the amounts are calculated, and how distributions interact with the rest of your tax picture gives you control over an obligation you cannot escape. The best time to plan was before you turned 73. The second-best time is now.