What Is The Biggest RMD Mistake?

The biggest RMD mistake is arriving at age 73 with a large traditional IRA or 401(k) and no plan for how forced distributions stack on top of everything else in your financial life. It is not forgetting a withdrawal; that penalty was reduced to 25% and is usually fixable. The expensive mistake is the one nobody sends a notice about: bracket creep, Medicare surcharges, and newly taxable Social Security, all triggered by distributions you could have planned around years earlier.

Why the Real Mistake Is Having No Strategy

You spent thirty years doing the right thing: maxing out your 401(k), deferring taxes, letting the account compound. Then at 73, the IRS sets the schedule, whether you need the money or not.

The distribution is ordinary income. It stacks on top of Social Security, which may push more of your benefit into taxable territory. It pushes against IRMAA thresholds, which can raise Medicare Part B and Part D premiums by hundreds of dollars per month. It may pull capital-gains income that would otherwise have been taxed at 0% into the 15% bracket.

None of that is the RMD rule's fault. The mistake is not preparing earlier, when you still had options.

The Numbers Behind the Squeeze

A 73-year-old using the Uniform Lifetime Table currently uses a divisor of 26.5, so roughly 3.8% of the balance must come out in year one, and the percentage rises each year.

The tradeoff people miss is bracket stacking. A retiree with $200,000 in annual pension and Social Security income does not need another forced $60,000, but a $1.5M traditional IRA that has never been touched generates close to that starting at 73. The income lands in the 22% or 24% bracket (2025 figures: 22% begins at $47,151 for single filers, 24% at $100,526).

Illustrative Example: Two Different Outcomes at 75

Two clients, both illustrative, retire at 65 with identical $1.2M traditional IRAs.

Client A does nothing during her pre-RMD years. At 73, assuming a 6% annual return, her balance is roughly $2M and her first RMD is approximately $75,000. She lands in the 24% bracket for the next decade, and IRMAA surcharges add roughly $3,400 per year in extra Medicare costs.

Client B begins modest Roth conversions at 66, moving $50,000 to $80,000 per year while his income is lower and before Social Security begins, paying tax at 22%. By 73 his traditional balance is closer to $1.1M. His RMDs are smaller, his bracket stays lower, his Medicare premiums stay standard, and the Roth passes to heirs with no RMD requirement.

The conversion taxes were real. So were the savings. The only difference was when the decision was made.

How This Connects to the RMDs and QCDs Pillar

The full picture of required distributions (how RMDs are calculated, the SECURE 2.0 timeline, the inherited-IRA 10-year rule, and how QCDs satisfy an RMD without taxable income) starts at RMDs and QCDs: The Required-Distribution Rules That Shape Retirement Income After 73. Within the Sporos Doctrine, this sits in the Harvest stage, but the real work happens earlier, in the Soil layer.

Frequently Asked Questions

Can I just reinvest my RMD back into an account?

Yes, but not into a traditional IRA or 401(k). The after-tax proceeds can go into a taxable brokerage account, a Roth IRA (if you meet income and earned-income requirements), or stay in cash.

What if I don't need the income from my RMD?

That is when strategy matters most, because unplanned distributions simply inflate your taxable income. A Qualified Charitable Distribution (up to $105,000 per individual in 2025, indexed for inflation) sends the RMD straight to a qualifying charity without the income appearing on your return.

Does a Roth IRA have RMDs?

No, original owners of Roth IRAs are never subject to lifetime RMDs under current law, a core reason pre-RMD conversions deserve serious evaluation. Roth 401(k)s carried RMD requirements until SECURE 2.0 eliminated them starting in 2024.

At what age should I start thinking about RMD planning?

The most impactful window is typically 60 to 72, before Social Security begins, before Medicare IRMAA lookback years matter, and before RMDs are mandatory. Waiting until 73 is waiting until the options have narrowed.

What to Do Next

1. Pull your current traditional IRA and 401(k) balances and project what they might be at 73 using a reasonable growth assumption. That number is the starting point for an honest conversation.
2. Run a rough bracket analysis for your expected retirement income before RMDs begin. If you see meaningful room between your projected income and the top of the 22 or 24 percent bracket, that room has value.
3. Ask your advisor whether a Roth conversion schedule has been modeled specifically around your RMD exposure, your Social Security timing, and your IRMAA thresholds. If the answer is vague, that is a finding worth acting on.
4. If you are charitably inclined and already taking RMDs, confirm whether you are using QCDs before writing personal checks to charity. The ordering matters for how the income appears on your return.

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.