Your First Required Minimum Distribution: What to Decide Before December 31
At 73 (75 if born in 1960 or later), the IRS begins requiring withdrawals from your pre-tax retirement accounts every year. When most of your savings sit in traditional IRAs and 401(k)s, these required minimum distributions (RMDs) can add more to your taxable income than anticipated, and significantly affect your tax picture. Your first RMD is the right time to set a plan for the 10, 20, 30 years that follow, not just this one.
The Rules for Your First RMD
Starting age: 73 if you were born from 1951 through 1959, or 75 if you were born in 1960 or later. If you turn 73 in 2026, this is your first RMD year.
Deadline: Your first RMD can be taken by December 31, 2026, or delayed until April 1, 2027. If you delay it, you will be required to take two RMDs in 2027.
Amount: The 2026 RMD amount is calculated by dividing each account’s balance as of December 31, 2025 by the IRS Uniform Lifetime Table factor, which is 26.5 at age 73. For example, a $2,000,000 IRA means a 2026 RMD of about $75,472. If your spouse is more than 10 years younger and is your sole beneficiary, a different IRS table applies and the amount is smaller.
Which accounts: IRA RMDs can be added together and taken from any one of your IRAs; each 401(k) RMD must come from that plan. Roth IRAs and Roth 401(k) accounts have no RMDs for the original owner.
Still working: If you are still employed at the company sponsoring your 401(k) and own 5% or less of that business, you may be able to delay RMDs from that plan until you retire (if the plan document permits it). Owners of more than 5% of the sponsoring company must begin RMDs at the normal age regardless of whether they are still working. This exception never applies to IRAs.
Missed RMD: The excise tax is 25% of the amount not taken, reduced to 10% if you correct it within the IRS correction window, generally by the end of the second year after the year it was missed.
Where Your RMD Lands on Your Tax Return
An RMD is taxed as ordinary income. Be mindful of tax brackets: In 2026, the 32% bracket starts above $403,550 of taxable income for married couples filing jointly, or $201,775 for single filers. There is also a net investment income tax of 3.8% that applies once modified adjusted gross income is above $200,000 single or $250,000 married filing jointly.
The RMD isn't investment income, but it raises your income, so more of your dividends and gains could be taxed.
Medicare's Income-Related Monthly Adjustment Amount (IRMAA) uses income from two years prior. A large RMD taken in 2026 will be reflected in 2028 Medicare Part B and D premiums.
Four Decisions Worth Reviewing This Year
December or April: Delaying your first RMD to April 1, 2027 moves that income into 2027, but 2027 then carries two RMDs. Delaying usually helps only if 2026 income is unusually high, for example from a business or property sale.
Process RMD first, then look at a Roth conversion: A conversion cannot count toward your RMD, and the first dollars withdrawn in an RMD year are treated as your RMD, so take the RMD first. Converting in years with room in a lower bracket can reduce future RMDs and leave your heirs tax-free Roth assets.
Qualified Charitable Distributions (QCDs): From age 70½, you can give up to $111,000 (in 2026) straight from your IRA to qualified charities. It counts toward your RMD if processed correctly and isn't included in your taxable income, which can keep you under an IRMAA threshold. In 2026, a new 0.5% of AGI floor limits itemized charitable deductions for all donors, and top-bracket donors face an additional cap on the deduction's value; a QCD bypasses both because it is an income exclusion, not a deduction.
Withholding instead of estimated payments: Federal tax withheld from an IRA distribution is generally treated as paid evenly through the year, even if withheld in December, so it can replace quarterly estimates.
Who Inherits the Pre-Tax Money
Most children who inherit an IRA must empty it by December 31 of the 10th year after the owner's death, and because you will have started RMDs, they generally must also take annual distributions in years 1-9, taxed as ordinary income, often in their peak earning years.
Some families name a charity as beneficiary of their pre-tax IRAs, since a qualified charity generally pays no income tax on them, and leave Roth accounts, and taxable investments, which generally take a new cost basis at death, to their children.
Review beneficiary designations on every account to make sure they are in line with your wishes. Beneficiary designations supersede a Will or Trust for the account. For example: If your Trust states that your IRA is to be distributed to your children but beneficiaries listed on the account are your parents, your parents will inherit the account.
Your First-RMD Checklist
Review RMD amount from each account
Ask each custodian for its year-end cutoff date for processing distributions
Decide: first RMD by December 31, 2026, or by April 1, 2027
Project whether the RMD will trigger a higher IRMAA tier in 2028 and whether a QCD reduces it
Set your QCD and withholding instructions before the RMD is processed
Review the beneficiary forms on every IRA and 401(k)
Planning Beyond This Year
Taking only the minimum keeps this year's tax bill lower, but it can mean larger RMDs, higher Medicare premiums, and a larger tax bill for your heirs later. The right balance depends on your income over the next years. Gather your numbers before December and talk to your financial advisor.
— Leslie Rea, MBA, CFP®, MCEP® · AG Wealth Management
General education only. Not investment, tax, or legal advice. Not a recommendation to buy or sell any security. Reading this post does not create an advisory relationship. AG Wealth Management, PLLC is a fee-only registered investment adviser and a fiduciary to its clients. Registration does not imply a certain level of skill or training. Consult your financial advisor (and tax or legal professionals as needed) before acting. Form ADV: adviserinfo.sec.gov.
