What are you doing with your RMD this year? Many people don’t think about it beyond "withdraw it, pay the tax, move on."
But the mechanics of how you take your RMD, when you take it, what you do with the proceeds, and how it interacts with the rest of your financial picture can create a surprisingly wide range of outcomes.
What Happens If You Miss the RMD Deadline?
A required minimum distribution (RMD) is the amount the IRS requires you to withdraw each year from most tax-deferred retirement accounts once you reach a certain age. Under current law, RMDs begin at age 73 for those born between 1951 and 1959, and at age 75 for those born in 1960 or later.
Miss the December 31 deadline without a qualifying exception, and the IRS can impose a 25% excise tax on the amount you should have withdrawn. That penalty was reduced from 50% under the SECURE 2.0 Act, and can drop further to 10% if corrected promptly. None of that is worth risking. The planning window is before the deadline, not after it.
The Ripple Effects Many Retirees Don't See
Withdrawals from a traditional IRA or 401(k) generally add to your taxable income. But the effects reach further than you might expect:
- Social Security taxation. Up to 85% of your benefit can become taxable depending on combined income. A larger RMD can push you over that threshold.
- IRMAA surcharges. Medicare Part B and Part D premiums are income-based, and the calculation looks back two years, so this year's RMD can show up on your 2028 Medicare bill.
- Net Investment Income Tax. For higher-income retirees, a larger RMD can trigger or worsen this 3.8% surtax.
Two Moves to Evaluate Before December 31
Qualified charitable distributions. If you're 70½ or older and charitably inclined, a QCD lets you send up to $111,000 in 2026 directly from your IRA to a qualified charity. That amount counts toward your RMD and is excluded from taxable income entirely, no itemizing required. Compare that to taking the distribution, paying tax, then donating what's left. For a client in the 22% or 24% bracket already planning to give, a QCD can eliminate the tax on that gift outright. The money must move directly from IRA to charity. Writing your own check after the fact doesn't qualify.
Roth conversions. Converting a portion of a traditional IRA to a Roth means paying tax now in exchange for potentially tax-free growth and withdrawals later, with no future RMDs on that money. A lower-income year, before a pension starts or Social Security begins, can be the right window. One rule to know: your RMD must come out first. The IRS won't let you convert it. Only the amount above your RMD is eligible.
If you don't need the RMD to live on, strategies like reinvesting it in a taxable account, directing it toward 529 education savings plan gifts for grandchildren, or using it for annual exclusion gifts (gifts small enough to avoid gift tax reporting, up to $19,000 per person and $38,000 per married couple in 2026) could all merit a conversation before year-end.
Questions to Answer Before December 31
- Have you calculated your 2026 RMD across every account, including any inherited IRAs?
- Does your RMD push income into a range that affects Social Security taxation, IRMAA, or the net investment income tax?
- Are you charitably inclined and 70½ or older? Have you considered a QCD?
- Does this year's tax bracket make a partial Roth conversion worth it?
- If you don't need the income, do you have a plan for where it goes?
The December 31 deadline is fixed. If your RMD strategy hasn't been reviewed this year, let's change that before January. Schedule a complimentary consultation to talk through your options.
Frequently Asked Questions About Required Minimum Distribution Planning
What is the RMD deadline for 2026?
For many retirees, 2026 RMDs must be taken by December 31, 2026. One exception is your very first RMD year, when you may delay until April 1 of the following year. Delaying means two distributions land in one calendar year, which can meaningfully affect your tax bracket and Medicare premiums.
What happens if I miss my RMD deadline?
The IRS can impose an excise tax on the shortfall. Under SECURE 2.0, that can drop to a smaller percentage if corrected within a specific window.
Do I have to take an RMD from every retirement account I own?
RMDs apply to traditional IRAs, rollover IRAs, SEP IRAs, SIMPLE IRAs, and many employer-sponsored plans, including 401(k)s. Roth IRAs are not subject to RMDs during the original owner's lifetime. Inherited IRAs, whether from a spouse or non-spouse, follow separate rules reshaped by the SECURE Act and SECURE 2.0, and should be reviewed individually.
Can I take more than my RMD?
Yes, but the extra amount cannot be applied to a future year's RMD. Each year's RMD is recalculated based on your prior year-end balance and a life expectancy factor, so withdrawing more may lower future RMDs, but it can also increase your taxable income this year.
Can I make a QCD from a 401(k), or only an IRA?
A QCD must come directly from an IRA. 401(k) funds don't qualify. If most of your savings sit in an employer plan, rolling funds into a traditional IRA first can open the door to a QCD, but it might be a good idea to start early. A rollover takes time to settle, and the QCD can't be processed until the funds arrive.
Does my RMD affect my Medicare premiums?
It can. Medicare Part B and Part D premiums are based on modified adjusted gross income from two years prior. An RMD that pushes you above certain IRMAA thresholds may trigger premium surcharges, which is one more reason to coordinate RMD timing with your broader tax plan well before year-end.