RMD Basics

When They Begin: If you’re turning 73 this year, your first RMD is due by April 1, 2026. After that, RMDs must be taken annually by December 31.

Which Accounts Are Included: Traditional IRAs, SEP IRAs, SIMPLE IRAs, and most employer-sponsored retirement plans like 401(k)s. (Roth IRAs are exempt during your lifetime.)

How They’re Calculated: Your RMD is based on your prior year-end account balance and an IRS life expectancy factor.

Penalties for Missing: The IRS can assess a penalty of 25% of the missed amount (reduced to 10% if corrected quickly).

Special Rules for Inherited IRAs

If you’ve inherited a retirement account, the rules are different—and often more complex:

• • Spouse beneficiaries can generally treat the IRA as their own, providing flexibility.

  • Non-spouse beneficiaries (like children) typically must withdraw the full balance within 10 years of the original owner’s death. In some cases, annual RMDs are also required within that 10-year window.

  • Eligible Designated Beneficiaries—such as minor children, disabled individuals, or those within 10 years of the original owner’s age—may have extended payout options.

The takeaway: Inherited IRA rules are not one-size-fits-all. A misstep could trigger avoidable taxes or penalties.

Why Planning Ahead Matters

RMDs don’t just impact your retirement withdrawals; they can influence:

• Your tax bracket and annual tax bill

• Medicare premiums (IRMAA)

• Social Security taxation

• Long-term estate planning and wealth transfer strategies

Coordinating your RMDs as part of a bigger financial plan can help you reduce taxes and keep your money working harder for you.