If you have money in a traditional IRA or a 401(k), the IRS eventually wants its share. Required minimum distributions, or RMDs, are the mandatory withdrawals you must take from most pre-tax retirement accounts once you reach a certain age. With less than three months left in 2026, now is the time to make sure yours is handled correctly.
At Crestview Wealth Management, we see the same pattern every fall: clients who have saved diligently for decades suddenly face a deadline, a tax bill, and a lot of questions. This guide walks through what you need to know, and what to do next.
Under current law (SECURE 2.0), the age at which RMDs begin depends on your birth year:
RMDs apply to traditional IRAs, SEP and SIMPLE IRAs, and employer plans like 401(k)s and 403(b)s. Roth IRAs don’t require withdrawals during your lifetime, and as of 2024, Roth accounts inside employer plans no longer require them either.
Your RMD must generally be taken by December 31 each year. There’s one exception: in the year you first become subject to RMDs, you can wait until April 1 of the following year.
Before you take that delay, pause. Waiting means taking two distributions in the same calendar year, which can push you into a higher tax bracket and raise your Medicare premiums. For many retirees, taking the first RMD in the year it’s due is the smarter move.
The basic formula is simple: divide your account balance as of December 31 of the prior year by a life expectancy factor from the IRS tables.
For example, if you’re 73 and your IRA was worth $500,000 on December 31, 2025, the IRS Uniform Lifetime Table factor is 26.5. Your 2026 RMD would be about $18,868 ($500,000 ÷ 26.5).
A few rules that trip people up:
If you miss an RMD or take too little, the IRS can charge a penalty of 25% of the amount you should have withdrawn. That drops to 10% if you correct the mistake within a limited window. Either way, it’s a penalty that’s entirely avoidable with a little planning.
An RMD doesn’t have to be a pure tax hit. With the right strategy, it can be part of a broader retirement income strategy.
1. Give to charity with a Qualified Charitable Distribution (QCD). If you’re 70½ or older, you can send money directly from your IRA to a qualified charity. The amount counts toward your RMD but isn’t included in your taxable income. For charitably minded retirees, it’s one of the most efficient moves available.
2. Plan the tax withholding. Taxes on RMDs are due like any other income. Withholding from the distribution, or making estimated payments, can help you avoid a surprise at filing time. Our tax services team can help you coordinate this.
3. Take distributions in kind. You don’t always have to sell investments to satisfy an RMD. You can transfer shares to a taxable account, which can make sense if you want to keep a position.
4. Reduce future RMDs. Strategies like partial Roth conversions can shrink the pre-tax balance that drives future RMDs. We cover that in our guide to Roth conversions before year-end (update link once published). Note that you can’t convert your RMD itself; the RMD has to be taken first.
RMD planning also affects your heirs. Most non-spouse beneficiaries who inherit an IRA must empty the account within 10 years, and if you had already started RMDs, they may need to take annual distributions during that period as well. Reviewing your beneficiary designations and your estate and legacy plan alongside your RMD strategy helps avoid costly surprises for the people you love.
What happens if I forget to take my RMD? The IRS can assess a penalty of 25% of the amount you failed to withdraw, reduced to 10% if corrected promptly. If you’ve missed one, contact your advisor and tax professional right away to discuss correcting it.
Do I have to take an RMD from a Roth IRA? No. Roth IRAs have no RMDs for the original owner. Beginning in 2024, Roth 401(k) and Roth 403(b) accounts also no longer require them.
Can I take my RMD in monthly installments? Yes. You can take your RMD in one lump sum or spread it out through the year, as long as the full amount is withdrawn by December 31.
Can I reinvest my RMD? You can’t roll it back into a retirement account, but you can invest the money in a regular taxable account.
Do RMDs affect my Social Security and Medicare? They can. RMDs increase your taxable income, which may cause more of your Social Security benefit to be taxed and could raise your Medicare Part B and D premiums. This is one reason to coordinate your RMD with your Social Security strategy.
Does Crestview help with RMD planning? Yes. Building a withdrawal plan that is tax-aware and matched to your income needs is at the heart of what we do. Learn more about our process or meet our team.
If you’re approaching RMD age, or you’re already taking distributions and wonder if there’s a better way, we’d be glad to help. Schedule a Clear Path Consultation or call us at (469) 338-5333.
Crestview Wealth Management, LLC (CWM) is a Texas-registered investment advisor. CWM is a member of Ethos Financial Partnership, a Securities and Exchange Commission registered investment advisor. Content contained herein is not intended and should not be construed as personalized investment advice or an offer for the purchase or sale of any security, insurance, or other investment product. Investments involve the risk of loss, including possible loss of principal. Please consult with a qualified financial, tax, accounting, or legal professional before implementing any ideas or strategies discussed here. Content provided may be obtained from sources believed to be reliable but cannot be guaranteed as to its accuracy or completeness.