RMDs and QCDs: The Required-Distribution Rules That Shape Retirement Income After 73

The IRS lets your tax-deferred accounts (Traditional IRA, 401(k), 403(b)) grow tax-free for as long as you want. Almost. Once you hit your "applicable age" (73 for most current pre-retirees), the rules change. The government wants its tax revenue, and Required Minimum Distributions (RMDs) are how it gets it. Miss one and the penalty is steep. Plan around them well and you can reduce lifetime tax meaningfully — sometimes via a strategy most retirees have never heard of called the Qualified Charitable Distribution.

This page lives in the Harvest stage of the Sporos Doctrine. RMDs are mandatory harvest; the question is whether you harvest more than the minimum (and into what wrappers), and whether you can use a QCD to skip the tax entirely.

What RMDs Are

A Required Minimum Distribution is a yearly amount the IRS forces you to withdraw from tax-deferred retirement accounts once you reach the applicable age. The amount is your prior-year-end account balance divided by a life-expectancy factor from IRS Uniform Lifetime Tables.

At age 73, the divisor is roughly 26.5 — that's about 3.77% of the balance. At 80, it's about 4.95%. At 90, it's about 8.77%. The percentage rises every year because the table assumes your remaining life expectancy shrinks.

Whatever you withdraw is taxed as ordinary income.

The applicable age:

73 if you turned 72 in 2023 or later (most current pre-retirees).
75 if you turn 74 in 2033 or later (under SECURE 2.0).
Your first RMD must be taken by April 1 of the year after you turn 73. After that, by December 31 each year.

SECURE 2.0 Changes That Matter

The 2022 SECURE 2.0 Act made several RMD changes that pre-retirees should know:

Age delayed from 72 to 73 (effective 2023), and to 75 starting in 2033.
Missed-RMD penalty reduced from 50% to 25% (and to 10% if corrected within two years). Still painful, but no longer catastrophic.
Roth 401(k) RMDs eliminated (effective 2024). Previously, employer-sponsored Roth accounts had RMDs in the owner's lifetime, unlike Roth IRAs. That distinction is now gone. (Roth 401(k)s now match Roth IRAs — no lifetime RMDs.)
QCDs indexed for inflation (covered below).
One-time $50,000 QCD to a charitable gift annuity or charitable remainder trust now permitted.

The Inherited IRA 10-Year Rule

If you inherit an IRA from someone who died in 2020 or later, and you are not their spouse, you generally must liquidate the entire account within 10 years of the original owner's death. This is the post-SECURE Act change that ended the "stretch IRA" for non-spouse beneficiaries.

A wrinkle: under IRS Reg 1.401(a)(9)-5 (final regulations issued in 2024), if the original owner was past their RMD age at death, the non-spouse beneficiary must also take annual RMDs within the 10-year window, not just liquidate by year 10. The IRS waived penalties for missed annual RMDs in 2021-2024 while the rules were being clarified, but the requirement is now active for 2025 and beyond.

Practical implication for a beneficiary: front-load withdrawals in low-tax-bracket years rather than waiting until year 10 and getting hit with a massive single-year tax bill.

Qualified Charitable Distributions (QCDs)

The QCD is one of the most under-used tools available to charitably-minded retirees over 70½. The mechanic:

You direct your IRA custodian to send a distribution directly to a qualified 501(c)(3) charity.
The amount goes from your IRA to the charity. It never touches your hands.
The distribution counts toward your RMD for the year, up to an annual limit ($105,000 in 2024, indexed for inflation).
It does not show up in your taxable income — not as a distribution, not as a contribution.

This matters because Social Security taxability, IRMAA tiers, the ACA premium tax credit, the 3.8% net investment income tax, and a half-dozen other thresholds all key off your modified adjusted gross income (MAGI). A normal RMD pushes MAGI up; a QCD doesn't. For a retiree already planning to give $20k/year to charity, doing it via QCD instead of with after-tax cash can save thousands in IRMAA premiums and Social Security taxation.

Rules:

You must be 70½ or older (note: this is 70½, not the RMD age of 73 — QCDs are available 2.5 years before RMDs start).
The check must go directly from custodian to charity. If it touches your account first, it's a regular taxable distribution.
Must go to a public 501(c)(3). Donor-advised funds, private foundations, and supporting organizations do not qualify.
Annual cap is $105,000 per individual in 2024 (married couples can each do their own).

QCDs are the single cleanest way to satisfy RMDs without the tax bite if you would have given to charity anyway.

RMD Aggregation Rules

If you have multiple Traditional IRAs, you can calculate the RMD on each separately but withdraw the total from any one (or combination) of them. 401(k)s do not aggregate — each 401(k) plan calculates and distributes its own RMD separately. This is one reason rolling old 401(k)s into a single IRA simplifies retirement — one RMD, one calculation, one transaction.

Inherited IRAs do not aggregate with your own IRAs. Spousal-inherited IRAs that have been transferred into your own name do.

How This Fits the Doctrine

RMDs sit at the intersection of the Harvest stage and the Soil stage. The Soil decisions (where your dollars sit) determine how big the RMD will be; the Harvest decisions (how you draw from it) determine the tax impact.

The highest-leverage pre-RMD planning move is partial Roth conversions during the bracket-friendly years between retirement and age 73. Every dollar moved from Traditional to Roth before RMDs start is a dollar that won't be force-distributed at 73 at potentially-higher brackets, and is a dollar your heirs eventually inherit in a Roth wrapper (much better than a Traditional IRA wrapper under the 10-year rule).

The math is rarely close. For high earners with significant Traditional balances, ignoring this window is one of the most expensive retirement-planning mistakes.

Frequently Asked Questions

Can I delay my first RMD?

Yes — your first RMD (the one for the year you turn 73) can be taken by April 1 of the following year. But all subsequent RMDs must be taken by December 31. Many people regret the delay because they end up taking two RMDs in one calendar year, which can push them into a higher bracket.

What happens if I forget?

The penalty is 25% of the missed amount (down from 50% under SECURE 2.0). If corrected within two years, the penalty drops to 10%. Either way, file Form 5329 to report and request a waiver if you have reasonable cause.

Do Roth IRAs have RMDs?

No, not during the original owner's lifetime. Roth IRAs are one of the most powerful estate-planning tools precisely because they can compound tax-free until your death, then pass to heirs.

What about Roth 401(k)s?

As of 2024, no lifetime RMDs (under SECURE 2.0). Before 2024, Roth 401(k)s did have RMDs in the owner's lifetime — one reason many retirees rolled them to Roth IRAs at separation.

Can I take more than the RMD?

Yes. The RMD is a minimum, not a maximum. But every dollar over the RMD adds to your ordinary income that year. Coordinate carefully with other income sources.

Does an RMD count toward a Roth conversion?

No. You must take your RMD first, in cash. Only amounts above the RMD can be converted to Roth. The RMD itself cannot be converted.

What to Do This Week

List every tax-deferred retirement account you own. Traditional IRA, 401(k)s (current and old), 403(b)s, SEP-IRAs.
If you're 70½ or older and give to charity: ask your IRA custodian for the QCD paperwork. Move charitable giving to QCD format starting next year.
If you're 60-72: model the RMD bow-wave. Estimate your account balances at 73, your projected RMDs, and your expected tax bracket. If those numbers say you'll be in a higher bracket at 73 than today, Roth conversion is almost certainly the right move now.
Consolidate old 401(k)s into a single IRA where possible. One RMD calculation is simpler than five.
Check beneficiaries on every account. The 10-year rule has changed how heirs receive these accounts, and outdated beneficiary forms can wreck a careful plan.

The information provided is for educational purposes only and does not constitute investment, legal, or tax advice. Tax law changes frequently — verify current rules before acting. Consult with qualified professionals for guidance specific to your situation.