Frank Czerny has $440,000 in a traditional IRA. He turned 73 in September. He knows he has to take something out before the end of the year. What he doesn’t know is exactly how much, or what happens if he doesn’t, or whether there’s a smarter way to do it than just moving money from one account to his checking account and paying taxes on it.

That’s the call I get every October.

Required minimum distributions aren’t complicated. But they’re not intuitive, and the rules changed enough under SECURE 2.0 that even people who’ve been tracking this for years sometimes have an outdated picture. Here’s where things stand for 2026.

The starting age

Under the SECURE 2.0 Act, passed in December 2022, the age at which you must start taking distributions from your traditional IRA, rollover IRA, or 401(k) depends on your birth year. If you were born between 1951 and 1959, your required beginning date kicks in at 73. If you were born in 1960 or later, the age is 75.

Frank, born in 1953, hit his required beginning date this year.

The old starting age was 70½. Then SECURE 1.0, passed in 2019, moved it to 72. SECURE 2.0 pushed it to 73, and then to 75 for the next cohort. If you were born in 1960 or later, you won’t face a mandatory distribution until 2035 at the earliest. That’s a meaningful window for Roth conversion work if you haven’t already used it. I wrote about that planning opportunity at /money/roth-conversion-strategy/.

The December 31 deadline, and the one exception

Most people have until December 31 of each year to take their RMD. Miss that date and you’ve got a penalty problem.

The exception applies in your first year. If 2026 is the year you turn 73, you can delay that first distribution until April 1, 2027. The IRS allows this grace period to give you time to figure out what you’re doing.

Here’s the trap: the grace period doesn’t eliminate the requirement, it defers it. If you wait until April 1, 2027 to take your 2026 RMD, you still have to take your 2027 RMD by December 31, 2027. Two distributions in the same calendar year. Two taxable events. For anyone watching their income closely because of Medicare surcharges, having two RMDs land in the same year can push you into territory you didn’t anticipate.

Frank has a relatively straightforward tax situation and doesn’t expect 2026 income to be unusually high. He’s taking his distribution in December. The April option exists. It’s not always a favor.

How much Frank is taking out

The IRS calculates your RMD by dividing your account balance as of December 31 of the prior year by a distribution period from the Uniform Lifetime Table. This is a life-expectancy factor that the IRS updates periodically. The most recent update came in 2022, with revised mortality assumptions, and those numbers apply now.

Frank’s IRA balance was $440,000 on December 31, 2025. At age 73, the distribution period from the Uniform Lifetime Table is 26.5. Divide $440,000 by 26.5 and you get $16,604. That’s his minimum for the year. He can always take more. But $16,604 is the floor, and it’s the number around which all the planning happens.

He’ll owe ordinary income tax on that withdrawal. At his income level it stays in the 12% federal bracket or lower, and Wisconsin’s retirement income subtraction for filers 67 and older keeps the RMD off his state return. Roughly speaking, he keeps at least about $14,600 out of the $16,604. These aren’t hypothetical numbers. They’re what I put in front of clients so they know what they’re actually looking at before they decide how to proceed.

What happens if you miss the deadline

Until a few years ago, failing to take your RMD on time triggered one of the harshest penalties in the tax code: 50% of the amount you should have taken. SECURE 2.0 reduced that substantially. The excise tax is now 25% of the shortfall.

There’s also a correction window. Catch the mistake and take the distribution within the window, which generally runs through the end of the second taxable year following the year of the failure, and the penalty drops to 10%. To claim the reduced rate you need to take the distribution and file IRS Form 5329.

The waiver option still exists as well. File Form 5329 with a brief reasonable-cause explanation and the IRS may waive the penalty entirely. That’s not a guarantee, but it’s not an unusual outcome for a first mistake with no pattern of non-compliance.

A lot of people I talk to have heard “50% penalty” and think that’s still the number. It isn’t. You still don’t want to miss the deadline. But the correction path is cleaner than it used to be.

Aggregation: IRAs and 401(k)s play by different rules

If you have multiple traditional IRAs, you add up the required distributions across all of them and take the total from whichever account you choose. Four IRAs, one calculated total, your pick of which account to pull from. You might choose the account with the best cash position, the lowest penalty for early redemption of a CD, or the one where you’re doing your other year-end planning. One pool.

Employer plans don’t work that way. Each 401(k) or 457(b) must satisfy its own RMD independently. Two old 401(k)s from former employers means two separate calculations and two separate distributions. You can’t satisfy one plan’s requirement with money from the other.

The practical implication: if you have old 401(k)s sitting with former employers, consolidating them by rolling into an IRA before your required beginning date simplifies everything considerably. One account, one calculation, one decision. I’m not saying rollover is always right, because employer plans occasionally offer specific protections or fund access worth preserving. But administrative simplicity is a real argument for consolidation if you have multiple old plans and no strong reason to keep them separate.

Qualified charitable distributions: keeping the money out of your taxable income

If you’re 70½ or older, there’s a way to satisfy all or part of your RMD without ever letting the money hit your taxable income. It’s called a qualified charitable distribution, or QCD.

Here’s how it works. Instead of taking the distribution into your own account and writing a check to charity, the IRA custodian sends the money directly from your IRA to the qualifying organization. The transfer counts toward your RMD requirement but never shows up as taxable income on your return. That’s the entire value of the strategy.

The annual limit for a QCD in 2026 is $111,000 per person. A married couple with separate IRAs could each direct up to $111,000.

If Frank wants to give $10,000 to his church or a Wisconsin food pantry, he can instruct his IRA custodian to make that transfer as a QCD. It satisfies $10,000 of his $16,604 requirement. He takes the remaining $6,604 in cash and pays ordinary income tax only on that amount. The $10,000 doesn’t appear in taxable income at all. He doesn’t have to itemize to get the benefit. The income exclusion is direct.

Rules to know: the transfer must go directly from the IRA to the charity. If you take the money out first and then donate it, it doesn’t qualify. The receiving organization must be a 501(c)(3). Donor-advised funds don’t qualify. Private foundations generally don’t qualify. The charity needs to give you written acknowledgment.

This is one of the most underused tools in retirement planning. That’s not an exaggeration.

The inherited IRA problem

If you inherited an IRA from someone other than a spouse who died after 2019, you’re generally subject to the 10-year rule. The account must be emptied by December 31 of the tenth year following the original owner’s death.

Whether you also have annual distribution requirements during those 10 years depends on one question: did the original owner die before or after their required beginning date?

If the original owner died before their RMD age, before they were required to start taking distributions, you don’t have annual requirements. Take it all in year 10 if that works better for your taxes.

If the original owner died after their required beginning date, meaning they had already started taking RMDs, you’re required to take annual distributions in years 1 through 9, calculated using your own life expectancy from the IRS Single Life Expectancy Table. The full account still must be emptied by year 10.

The IRS spent a few years issuing notices and proposed regulations while it sorted out the annual-distribution question. That period of uncertainty is over. The annual requirement for inheritors where the original owner had already started RMDs is in effect.

Surviving spouses, minor children, and a handful of other eligible designated beneficiaries get different treatment. A spouse who inherits an IRA can roll it into their own account and treat it as their own, which resets the timeline entirely.

If you’ve inherited an IRA and haven’t mapped out which category you’re in, make that call before year-end. The 10-year clock is running whether or not you’ve been tracking it.

Why RMDs push people into brackets they didn’t expect

The reason RMD planning matters beyond mechanics is the tax question, and specifically the Medicare question.

Frank’s Social Security comes to $28,000 per year. He has dividend income from a taxable account of roughly $4,000. Before the RMD, his total income is around $32,000. Add the $16,604 RMD and he’s at $48,604. Still in the 12% bracket or lower. Nothing dramatic happens.

Now imagine Frank had done less planning in his early retirement years and instead has $900,000 in the traditional IRA. His RMD at 73 on a $900,000 balance is about $33,962. His Social Security becomes more heavily taxable as income rises. He’s looking at more than $60,000 of total income in a year he expected to be quiet. His tax bill is substantially larger. And depending on what he earned two years prior, he may be paying Medicare surcharges on top of it.

That’s the IRMAA issue. Medicare Part B and Part D premiums are based on your income from two years prior. For 2026, Medicare is looking at 2024 income. If a large IRA distribution in 2024 pushed your modified adjusted gross income above $218,000 for married filers, you’re paying a surcharge on your 2026 Part B and Part D premiums. The first surcharge tier for joint filers starts at $218,001. It’s $81.20 per person per month extra on Part B alone, which is nearly $975 per year, per enrollee. The Part D surcharges stack on top.

I wrote about the IRMAA structure and how it interacts with Medicare plan decisions at /money/medicare-advantage-vs-supplement/. The short version: large, unexpected RMDs don’t just raise your income taxes. They can trigger Medicare cost increases two years later that you didn’t see coming.

This is the actual planning work. The RMD calculation is arithmetic. Managing the income that flows from it, before the distributions are mandatory, is strategy. The two-year lookback means the window to affect your 2026 Medicare premiums has already closed. But the window to affect 2028 premiums is 2026 income. That’s right now.

Before December 31

For anyone facing a 2026 RMD: calculate the number if you haven’t. Your IRA custodian should have already offered to automate this. If you haven’t heard from them, call. Most will set up an annual automatic distribution so you don’t have to track it manually.

If you’re charitably inclined and you’re 70½ or older, evaluate a QCD before taking any cash distribution. You can’t retroactively convert a distribution you’ve already taken into a QCD.

If this is your first RMD year and you’re considering the April 1 option, run the numbers on the two-distribution scenario for 2027 before committing to the delay.

If you’ve inherited an IRA and you’re somewhere in the 10-year window, make sure you understand whether annual distributions are required given when the original owner died.

And if the RMD amounts coming off your traditional accounts are larger than you expected, that’s information. It means your pretax balances are substantial, which is good. It also means your future tax obligations are larger than they might look. The time to manage that is before the distributions are mandatory, not after.

Frank is taking his $16,604 in December. He’s not thrilled about the tax bill. He is glad he knows the number before it shows up on his return.