RMD Basics in 10 Minutes

When does the IRS finally collect on the taxes you spent thirty years deferring? The year you turn 73, ready or not. A required minimum distribution is the slice of your tax-deferred savings the government forces you to pull out every year, whether you need the cash or not, and every dollar lands on your return as ordinary income.

What’s on the hook

Traditional IRAs, SEP and SIMPLE IRAs, and most workplace plans like 401(k)s and 403(b)s. Not Roth IRAs while you’re alive. The logic is plain: those dollars grew untaxed for decades, and the RMD is the bill coming due.

When the clock starts

Under current law your start age depends on your birth year. Born 1951 to 1959, RMDs begin at 73. Born 1960 or later, they begin at 75. You can push the very first one to April 1 of the next year, but I’d think hard before doing it. Defer and you take two RMDs in one calendar year, which stacks the income and usually the tax.

How the number is built

Take your account balance from December 31 of the prior year and divide it by a factor from the IRS life-expectancy table. For 2026, a 73-year-old uses a divisor of 26.5.

So $1,000,000 divided by 26.5 is about $37,736 you’re forced to withdraw and pay tax on.

Older age, smaller divisor, larger forced withdrawal. The math runs against you a little more every year. You can size yours with the RMD calculator.

The part that costs real money

Most people treat the RMD as a spring chore. The expensive mistake is not seeing it for what it is: a rising tax bill you could read a decade in advance. The balance compounds, the divisor shrinks, and the forced income climbs right when it can tip you into a higher bracket and lift your Medicare premiums two years later through IRMAA, the income-based surcharge on Medicare.

And miss one? The penalty is 25% of the amount you should have taken, cut to 10% if you fix it quickly. That’s a brutal price for a deadline that never moves.

If your accounts are large

The fix starts years before the first RMD, not during it. Roth conversions in your 60s, while income is low, shrink the balance that gets divided later. Once RMDs begin, a qualified charitable distribution sends the money straight to charity and keeps it off your return entirely. Neither one works as a December scramble.

The RMD is rare among tax bills. It tells you it’s coming, decades ahead. The whole game is to listen.