Understanding Required Minimum Distributions (RMDs)

Required Minimum Distributions (RMDs) are the minimum amounts that the IRS mandates you withdraw annually from your traditional retirement accounts once you reach a certain age. These rules ensure that individuals use their tax-deferred savings for retirement income rather than leaving them to grow indefinitely as an estate planning tool. For the 2026 tax year, the rules have been refined by the SECURE 2.0 Act to provide more flexibility while still enforcing strict penalties for non-compliance.

The age at which you must begin taking RMDs is currently set at 73. If you reach age 73 during 2026, you are required to take your first distribution. While you have a one-time option to delay this first payment until April 1, 2027, doing so would require you to take two distributions in the same tax year—the delayed 2026 RMD and the standard 2027 RMD. For those born in 1960 or later, the RMD age is scheduled to increase further to 75 beginning in 2033.

Calculating your RMD is a straightforward mathematical process based on your age and your account balance. You take the total value of your Traditional, SEP, or SIMPLE IRA as of December 31 of the previous year and divide it by a “distribution period” found in the IRS Uniform Lifetime Table. For an individual turning 73 in 2026, the distribution period is 26.5 years. If your account was worth $265,000 at the end of 2025, your 2026 RMD would be exactly $10,000.

Roth IRAs occupy a unique position in the RMD landscape, as they generally do not require any distributions during the original owner’s lifetime. Because Roth contributions are made with after-tax dollars, the IRS allows the funds to remain in the account and grow tax-free for as long as the owner lives. However, this exemption does not necessarily apply to beneficiaries; if you inherit a Roth IRA, you may be subject to RMD rules or the “10-year rule,” which requires the account to be fully liquidated within a decade of the original owner’s death.

The penalty for failing to take a full RMD is significant, though it was recently reduced to make it less punitive for honest mistakes. For 2026, the excise tax for a missed RMD is 25 percent of the amount that should have been withdrawn. However, if you realize the error and correct the shortfall within a two-year “correction window,” the penalty is reduced to 10 percent. To request a waiver of the penalty entirely, taxpayers must file IRS Form 5329 and provide evidence that the failure was due to a “reasonable error,” such as a serious illness or a miscalculation by a financial institution.

Source: Internal Revenue Service (IRS), “Retirement Topics — Required Minimum Distributions (RMDs)” and Publication 590-B (2026 Guidelines).