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

The IRS lets your tax-deferred accounts (a Traditional individual retirement account, or IRA, plus 401(k) and 403(b) plans) grow tax-free for as long as you want. Almost. Once you hit your "applicable age" (73 if you were born 1951 through 1959, 75 if you were born in 1960 or later), 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 may reduce lifetime tax, sometimes with a strategy many retirees have never heard of: the Qualified Charitable Distribution (QCD).

This page is about withdrawal planning, part of how we plan. RMDs are mandatory withdrawals; the planning decisions are whether you withdraw 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, or about 3.77% of the balance. At 80, it's about 4.95%. At 90, the divisor is 12.2, or about 8.2%. 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 were born 1951 through 1959.
• 75 if you were born in 1960 or later (most current pre-retirees), under the Setting Every Community Up for Retirement Enhancement (SECURE) 2.0 Act.
• Your first RMD must be taken by April 1 of the year after you reach your applicable age. 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 for people born in 1960 or later (whose first RMD year is 2035).
• Missed-RMD penalty reduced from 50% to 25% (and to 10% if corrected within the correction window, generally by the end of the second year after the missed year). 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, with no lifetime RMDs.)
• QCDs indexed for inflation (covered below).
• One-time QCD to a charitable gift annuity or charitable remainder trust now permitted (originally $50,000, indexed to $55,000 in 2026).

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, in addition to liquidating 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-loading withdrawals into low-tax-bracket years can avoid a large single-year tax bill in year 10.

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 ($111,000 in 2026, indexed for inflation).
• It does not show up in your taxable income, either as a distribution or as a contribution.

This matters because Social Security taxability, Income-Related Monthly Adjustment Amount (IRMAA) tiers, the Affordable Care Act (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 lower IRMAA premiums and Social Security taxation.

Rules:

• You must be 70½ or older (note: QCDs open at 70½, about 2.5 years before an RMD age of 73, or 4.5 years before 75).
• 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 $111,000 per IRA owner in 2026 (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. More accounts mean more RMD calculations, which is one factor to weigh when deciding what to do with an old 401(k). Each of the 4 options (leave it in the old plan, move it to a new employer's plan, roll it to an IRA, or cash it out) has its own pros and cons.

Inherited IRAs do not aggregate with your own IRAs (inherited IRAs from the same original owner can be aggregated with each other). Spousal-inherited IRAs that have been transferred into your own name do aggregate with your own.

How This Fits the Doctrine

RMDs sit where withdrawal planning and tax planning meet. Tax decisions (where your dollars sit) determine how big the RMD will be; withdrawal decisions (how you draw from it) determine the tax impact.

The most effective pre-RMD planning move is often partial Roth conversions during the bracket-friendly years between retirement and your RMD age (73 or 75). Every dollar moved from Traditional to Roth before RMDs start is a dollar that won't be force-distributed later 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 large 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 reach your applicable age, 73 or 75) 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 the correction window (generally by the end of the second year after the missed year), 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 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, which is one reason many retirees rolled them to Roth IRAs at separation.

Can I take more than the RMD?

Yes. The RMD sets a floor on withdrawals. 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 Next

What decides this for you. How much sits in tax-deferred accounts compared with what you will spend. Required distributions become a problem when the table forces out more than you need, taxed as ordinary income, at a share of the account that rises every year.

Where it goes wrong. People look at the first year, decide it is manageable, and stop there. The calculator above shows why the first year is a poor guide. The divisor shrinks annually, so the required share climbs even if the account does not grow, and it climbs into the same years that Social Security becomes taxable and Medicare surcharges start looking back at your income from two years prior. The year that hurts most usually lands around 78 or 80, and by the time it arrives the cheap years for doing anything about it are behind you.

Worth a conversation if you hold more than one tax-deferred account, you are anywhere between 60 and your RMD age, or you give to charity and are still writing checks from your bank account. That middle window matters most: it is the last stretch where you control the timing of the income yourself, and what you do with it decides how the next 20 years are taxed. Book a call and bring a list of your accounts.

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