You’ve spent decades tucking money away in 401(k)s and IRAs, watching the balance grow while the IRS patiently waited in the wings. Well, the wait is over. Once you hit a certain age, Uncle Sam stops asking and starts demanding his cut.
These are your Required Minimum Distributions (RMDs).
It sounds simple enough—take a little out, pay some tax. But if you’re sitting there wondering exactly how much are RMDs supposed to be this year, you’re likely looking at a moving target. Between the SECURE Act 2.0 shifts and the way the IRS recalculates your "life expectancy" every single January, the math never stays the same.
Honestly, it’s a bit of a moving puzzle.
The Core Math: How the IRS Decides Your Bill
The IRS doesn't just pull a number out of a hat. They use a specific formula that relies on two main ingredients: your account balance from the end of last year and a "distribution period" based on your age.
Basically, the formula looks like this:
Prior Year-End Balance / Distribution Period = Your RMD.
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Let's say you’re looking at your 2026 requirements. You need to pull your account statements from December 31, 2025. That specific number is your baseline. If you had $500,000 across your traditional IRAs on that day, that’s the starting point.
Next, you look at the IRS Uniform Lifetime Table. This is a list of "factors" that represent how many years the IRS thinks you have left to live. As you get older, this number gets smaller.
- Age 73: Factor is 26.5
- Age 75: Factor is 24.6
- Age 80: Factor is 20.2
- Age 90: Factor is 12.2
If you are 75 years old in 2026 and had that $500,000 balance, you'd divide $500,000 by 24.6. That comes out to roughly $20,325. That is the minimum you must take out by December 31. You can always take more, but you can’t take less.
The Age Confusion: When Do You Actually Start?
For a long time, the magic number was 70½. Then it was 72. Now? It depends on when you were born.
If you were born between 1951 and 1959, your RMD starting age is 73. If you were born in 1960 or later, you get a bit more breathing room—your age is 75.
There's a weird quirk for those turning 73 in 2026. You actually have until April 1, 2027, to take your first distribution. It feels like a win, but it’s often a trap. If you wait until April of 2027, you still have to take your 2027 RMD by December 31 of that same year.
That’s two RMDs in one tax year. For most people, that's a recipe for a massive tax bill that could've been avoided.
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Inherited IRAs are a Totally Different Beast
If you inherited an account from a parent or a relative, throw the "Uniform Lifetime Table" out the window. The rules here got much stricter after the 2019 SECURE Act.
Most non-spouse beneficiaries now fall under the "10-Year Rule." This means you generally have to empty the entire account by the end of the tenth year following the original owner's death.
But wait, it gets more annoying.
If the person you inherited the IRA from was already taking their own RMDs, the IRS recently clarified that you also have to take annual RMDs during that 10-year window. You can't just let the money sit and wait until year 10 to pull it all out. You have to take a slice every year based on your own life expectancy, then zero out the balance by the deadline.
The "Oops" Factor: What If You Miss It?
The IRS used to be brutal. If you missed an RMD, the penalty was 50% of the amount you failed to withdraw.
Imagine forgetting a $20,000 withdrawal and having to hand $10,000 to the government for nothing.
Thankfully, the SECURE Act 2.0 lowered this. The penalty is now 25%. If you realize the mistake and fix it quickly (usually within two years), that penalty can drop to 10%.
If you do mess up, don't just pay the fine. You should file IRS Form 5329 and attach a letter explaining the "reasonable error." Maybe you were ill, or there was a death in the family, or your bank gave you bad data. The IRS is surprisingly human sometimes and might waive the penalty if you've already moved the money out to correct the mistake.
Strategies to Lower the Hit
You can't escape RMDs, but you can soften the blow.
One of the most popular moves is the Qualified Charitable Distribution (QCD). If you’re 70½ or older, you can send up to $105,000 (the limit is now indexed for inflation) directly from your IRA to a 501(c)(3) charity.
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The beauty here? This money counts toward your RMD but isn't added to your adjusted gross income. It’s a way to give back while keeping your tax bracket under control.
Another thing to remember is that Roth IRAs do not have RMDs for the original owner. If you’re still a few years away from RMD age, doing "Roth conversions"—moving money from a traditional IRA to a Roth and paying the tax now—can shrink the balance that the IRS eventually uses to calculate your RMDs later.
Actionable Next Steps
- Check your 2025 year-end balances. Do this now. Don't wait for your tax preparer to ask in March. Look at every traditional IRA, SEP IRA, and SIMPLE IRA you own.
- Verify your age bucket. If you’re turning 73 in 2026, mark your calendar for your first withdrawal.
- Calculate the factor. Use the IRS Uniform Lifetime Table (Table III in Publication 590-B) to find your specific number for your age as of December 31, 2026.
- Consolidate if possible. If you have six different IRAs, you have to calculate the RMD for each one. You can take the total amount from just one of them, but the math is much easier if you aren't chasing six different statements.
- Automate it. Most big brokerages like Fidelity or Schwab have "RMD services" where they calculate and send the money automatically. It’s the easiest way to avoid the 25% penalty.