If you are entering retirement, understanding how required minimum distributions (RMDs) work is not optional. It is essential.
Tax-deferred accounts are subject to RMDs, which means account holders must withdraw a set minimum amount each year. Original owners of Roth IRA, Roth 401(k), and Roth 403(b) accounts are exempt from this requirement during their lifetimes, a benefit that became even clearer when SECURE 2.0 eliminated lifetime RMDs from designated Roth accounts in employer plans effective 2024.
To avoid confusion, or unwanted attention from the IRS, consult a financial advisor before calculating. The rules are detailed, and the penalties for getting them wrong are real.
No. 1: Secure 2.0 Increased the RMD Age to 73 (and 75 Is Coming)
SECURE 2.0 refers to legislation passed in late 2022 designed to expand retirement savings options for Americans. Its provisions include automatic enrollment for new workplace plans, penalty-free emergency withdrawals, enhanced catch-up contributions for older workers, and a higher RMD starting age. The core goal: give retirement savers more time for their money to compound before mandatory withdrawals begin.
Under the current rules, if you were born before July 1, 1949, your RMD started at age 70.5. If you were born between July 1, 1949, and December 31, 1950, the threshold was 72. If you were born between January 1, 1951, and December 31, 1959, the RMD starting age is 73. The law also schedules a second increase: starting January 1, 2033, the RMD age rises to 75 for those born in 1960 or later. That two-step framework gives the youngest savers still working today a significantly longer runway before mandatory withdrawals kick in.
No. 2: The RMD Aggregation Rules: Where You Can (and Cannot) Combine
Understanding how different accounts interact when satisfying your RMD is critical to avoiding IRS penalties. For Traditional IRAs, including SEP and SIMPLE IRAs, you must calculate the RMD for each account separately, but you can total the amounts and withdraw the entire sum from a single IRA or spread it across multiple accounts. A similar aggregation rule applies to 403(b) plans, where you can total the required distributions and satisfy them from a single 403(b) account.
The flexibility stops there. No aggregation is permitted for 401(k) and 457(b) plans: the specific RMD must be calculated and withdrawn from each individual employer plan separately. Inherited accounts add another layer of complexity, because RMDs for accounts inherited from different individuals cannot be combined or cross-applied under any circumstance.
No. 3: Secure 2.0 Reduces the RMD Penalty
Under the old rules, missing an RMD triggered a steep 50% excise tax on the amount that should have been withdrawn. SECURE 2.0 cut that penalty to 25%, giving retirees more room to recover from an oversight. The IRS further reduces the excise tax to 10% when the shortfall is corrected and the RMD is timely withdrawn within two years of the original due date.
To quote the IRS directly: “If an account owner fails to withdraw the full amount of the RMD by the due date, the amount not withdrawn may be subject to an excise tax of 25%, 10% if the RMD is timely corrected within two years.” The ability to reduce the penalty through prompt correction makes early detection of any missed distribution especially worthwhile.
No. 4: New Rules for Inherited Accounts
SECURE 2.0 also clarified how inherited IRAs and retirement plans work. Under the original SECURE Act of 2019, non-spouse beneficiaries were required to deplete inherited retirement accounts within 10 years of the account holder’s death. SECURE 2.0 retained that 10-year rule and added specific guidance based on when the original owner died. Eligible designated beneficiaries, such as spouses, chronically ill or disabled individuals, and anyone within 10 years of the owner’s age, can still stretch distributions over their single life expectancy.
Adult children and other designated beneficiaries face stricter terms. If the owner died before reaching their Required Beginning Date, the heir must empty the account entirely by December 31 of the 10th anniversary year, with no annual interim RMDs required. If the owner died on or after their Required Beginning Date, the beneficiary must take annual RMDs in years one through nine based on life expectancy and then fully drain the account by the tenth year. Importantly, the IRS ended its enforcement waiver on this annual-distribution requirement after 2024, meaning the rule is now fully in force starting in 2025.
Further information on this topic can be found on this IRS page.
No. 5: Secure 2.0 Increases Catch-Up Contributions
Starting January 1, 2025, individuals ages 60 to 63 can make enhanced “super” catch-up contributions of up to $11,250 a year to a qualifying workplace plan. This amount replaces, rather than supplements, the standard catch-up limit, which itself increased from $7,500 to $8,000 in 2026 for workers age 50 and older. Coordinating those figures with a financial advisor is worthwhile, since plan sponsors are not required to offer the super catch-up option.
Beginning in 2026, a new Roth catch-up requirement also takes effect. If you earned more than $150,000 in the prior calendar year, all catch-up contributions to a workplace plan at age 50 or older must now be made to a Roth account in after-tax dollars. Workers earning $150,000 or less, adjusted for inflation going forward, remain exempt from the Roth requirement. If your employer’s plan does not currently offer Roth contributions, that limitation could affect your ability to make any catch-up contributions at all, so checking with your plan administrator is a practical first step.
No. 6: Neutralize the RMD Tax Shock with a QCD
Because RMDs from traditional accounts are taxed as ordinary income, they can push you into a higher tax bracket or increase your Medicare premium exposure. If you do not need the RMD income for living expenses, a Qualified Charitable Distribution (QCD) offers a powerful alternative. Anyone age 70.5 or older can transfer up to $111,000 directly from an IRA to an eligible charity in 2026. That transfer satisfies your annual RMD obligation, either in full or in part, and the distributed amount is excluded entirely from your adjusted gross income.
The QCD’s value is particularly strong in 2026. New rules under the One Big Beautiful Bill Act now limit the deductibility of itemized charitable contributions to amounts exceeding 0.5% of adjusted gross income, and cap the tax benefit at 35% for top earners. A QCD bypasses both of those restrictions because it is an above-the-line exclusion from income, not a deduction. SECURE 2.0 also permits a one-time QCD of up to $55,000 to fund a Charitable Remainder Trust or a Charitable Gift Annuity, inside the $111,000 annual limit.
How to Calculate Your RMD
The IRS formula for calculating your RMD draws on three inputs: your total account balance as of December 31 of the prior year, your current age, and the applicable life expectancy factor from the IRS Uniform Lifetime Table. The agency divides the account balance by that life expectancy factor, which represents how many additional years the IRS expects you to live from your current age. For a reference table, see the IRS Uniform Lifetime Table provided by Capital Group.
Here is a straightforward example. A 73-year-old has a life expectancy factor of 26.5 under the IRS table. If the prior December 31 account balance was $250,000, the RMD equals $250,000 divided by 26.5, producing a required withdrawal of $9,433.96. If your spouse is the sole beneficiary of the account and is more than 10 years younger than you, a different table applies and your RMD will be lower. Additional calculation guidance is available on IRS Publication 590-B. As always, review your specific situation with a financial advisor before making any withdrawal decisions.
Editor’s note: This update adds the SECURE 2.0 provision that raises the RMD starting age to 75 beginning in 2033 for those born in 1960 or later, notes that the IRS ended its enforcement waiver on inherited IRA annual distributions after 2024, updates the standard catch-up contribution limit to $8,000 for 2026, reflects that the high-earner Roth catch-up requirement is now active in 2026, and adds context on how the One Big Beautiful Bill Act’s new charitable deduction limits heighten the value of qualified charitable distributions this year.
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