Required Minimum Distributions — and How to Soften Their Tax Hit
My father, Walt Reeves, turned 73 in Cleveland and got his first RMD notice. The IRS now forces money out of his traditional IRA every year, taxed as ordinary income — but the start age, the math, and the ways to soften it are all different from what most people (and most AI summaries) still say.
- The answer: starting at age 73 (rising to 75 in 2033), you must withdraw your prior 12/31 balance ÷ a life-expectancy factor each year. Roth IRAs have no RMDs for the original owner.
- The trap: miss an RMD and the penalty is 25% of the shortfall — 10% if you fix it promptly. It used to be 50%, so the old advice overstates it, but it is still painful.
- The recommendation: use Qualified Charitable Distributions to satisfy the RMD tax-free once you're charitable, and convert to Roth in your 60s to shrink the RMDs before they ever start.
Where the AI summary above gets this wrong
"You must start taking Required Minimum Distributions at age 72, and missing one triggers a 50% penalty on the amount you should have withdrawn."
That's the pre-2023 rule. Here's what it misses:
- The start age is 73, not 72 — SECURE 2.0 raised it for anyone who turns 72 after 2022, and it rises again to 75 in 2033. Telling Walt to start at 72 would have him taking a distribution a year early.
- Roth accounts are exempt — Roth IRAs have no RMDs for the original owner, and Roth 401(k)s have had no RMDs since 2024. The AI summary lumps everything together.
- The penalty is 25%, not 50% — and it drops to 10% if you correct the missed RMD promptly. The 50% figure is out of date.
When my father's first RMD notice arrived, the questions came fast: when does this start, how much, and what happens if he gets it wrong? I'll walk through the rules the way I walked him through them — and the moves I wish we'd made a decade earlier.
01 When RMDs start (73 → 75) and what's exempt
Required Minimum Distributions are the IRS's way of finally taxing the money that grew tax-deferred in your traditional accounts. Under SECURE 2.0, RMDs from traditional IRAs and 401(k)s now begin at age 73 for anyone who turns 72 after 2022, and the start age rises to 75 in 2033. Walt turned 73 in 2025, so 2025 is his first RMD year.
Not every account is in scope. Roth IRAs have no RMDs for the original owner, and Roth 401(k)s no longer have RMDs as of 2024 — a SECURE 2.0 change that finally aligned them with Roth IRAs. Traditional IRAs, 401(k)s, 403(b)s, and SEP/SIMPLE IRAs all require RMDs.
One timing wrinkle: your very first RMD can be delayed to April 1 of the year after you turn 73. The catch is that you then take two RMDs that year — the delayed first one and the regular second one — which can stack income into a single tax year. For most people, taking the first RMD in the year you turn 73 is cleaner.
First-year trap: delaying the first RMD to April 1 means two taxable distributions land in the same year. That can push you into a higher bracket and raise Medicare IRMAA surcharges two years later.
Source: IRS — RMD FAQs
02 How the RMD is calculated
The formula is simple: your RMD equals the balance on December 31 of the prior year divided by a life-expectancy factor from the IRS Uniform Lifetime Table. The factor falls as you age, so the percentage you must withdraw rises over time.
| Age | Uniform Lifetime factor (approx.) | RMD as % of balance |
|---|---|---|
| 73 | 26.5 | ≈ 3.8% |
| 75 | 24.6 | ≈ 4.1% |
| 80 | 20.2 | ≈ 5.0% |
Walt's traditional IRA was worth $1,000,000 on December 31, 2024. At 73 his factor is about 26.5, so his 2025 RMD is $1,000,000 ÷ 26.5 ≈ $37,736 — all of it ordinary income. The factors above are approximate; the exact ones live in Pub 590-B and update periodically.
03 Worked example: your RMD this year
Put in your prior-year balance and your age to see this year's estimated RMD. The calculator maps your age to an approximate Uniform Lifetime factor and divides — the same arithmetic Walt and I did on the back of his statement.
Shows: your estimated RMD for the year — prior 12/31 balance divided by an approximate Uniform Lifetime factor for your age. Ignores: multiple accounts and aggregation rules, the still-working exception, QCDs, the tax you'll owe on the distribution, and the first-year April-1 option.
On the defaults above, the worked example returns $37,736. At age 73, your factor is about 26.5, so you must withdraw roughly $37,736 this year — taxed as ordinary income.
04 QCDs and the still-working exception
The single best tool for a charitable retiree is the Qualified Charitable Distribution. From age 70½, you can send up to $108,000 (2025) directly from an IRA to a qualified charity, and that gift counts toward — and can fully satisfy — your RMD tax-free. The money never hits your adjusted gross income, which protects the things AGI drives: the taxation of Social Security, Medicare IRMAA, and more. Walt already gives to his church; routing those gifts through a QCD is the most efficient dollar he moves all year.
A QCD beats taking the RMD and then donating it. The donation deduction only helps if you itemize, and even then it doesn't lower AGI. A QCD lowers AGI directly because the income never appears.
If you're still employed at 73+ and own no more than 5% of the company, the still-working exception lets you delay RMDs from that current employer's 401(k) until you actually retire. It does not apply to IRAs, and it does not apply to old 401(k)s from former employers — only the plan where you're still working.
05 Shrink RMDs early with Roth conversions
The biggest lever on required minimum distributions is not how you take them — it is how large the traditional balance is when they start. Every dollar moved to Roth before 73 is a dollar that will never generate an RMD, for you or for your heirs.
The window to do that cheaply is your sixties: after you stop working, when earned income has ended, but before Social Security and RMDs push your taxable income back up. For many people that is a five-to-ten year period in which they are in a materially lower bracket than they were at 55 or will be at 75.
The approach that works is filling brackets deliberately rather than converting a round number — converting exactly enough each year to reach the top of the 12% or 22% bracket, then stopping. Two things to watch alongside it: IRMAA, which raises Medicare premiums based on income from two years earlier, and the taxation of Social Security benefits, both of which can make a conversion cost more than the bracket alone suggests.
If you do not need the RMD to live on, you still have to take it — but you can immediately reinvest it in a taxable brokerage account. You owe tax on the distribution either way, and the dollars stay working for you rather than sitting in cash.
A qualified charitable distribution is the other route for anyone giving to charity anyway: it satisfies the RMD without the amount appearing in income at all, which is better than taking the distribution and claiming a deduction.
| Move | What it does to RMDs | Best timing |
|---|---|---|
| Roth conversion | Permanently shrinks the traditional balance that RMDs are based on | Low-income years in your 60s, before 73 |
| QCD | Satisfies the RMD tax-free, keeps AGI down | Age 70½+, if you're charitable |
| Still-working exception | Delays 401(k) RMDs (not IRAs) while employed | If working past 73, <5% owner |
| Reinvest unneeded RMDs | Doesn't lower the RMD, but keeps the money invested in a taxable account | Any year you don't need the cash |
Source: IRS — RMD FAQs
Watching my father get his first RMD notice taught me the real lesson: the time to manage RMDs is in your 60s, not at 73. By the time the IRS is forcing money out, your options are mostly cosmetic — the withdrawal order barely moves the needle. The two things that actually matter are Roth conversions in the low-income gap years before RMDs start, which shrink the balance the formula divides, and QCDs once you're giving anyway, which make the distribution disappear from your taxable income entirely. Do those two things and the clever withdrawal sequencing everyone obsesses over becomes a rounding error.
FAQ
At what age do RMDs start in 2025?
RMDs from traditional IRAs and 401(k)s begin at age 73 for anyone who turns 72 after 2022, and the start age rises to 75 in 2033. Roth IRAs have no RMDs for the original owner, and Roth 401(k)s have had no RMDs since 2024.
How is my RMD calculated?
Divide the prior December 31 balance by a life-expectancy factor from the IRS Uniform Lifetime Table. At 73 the factor is about 26.5, at 75 about 24.6, and at 80 about 20.2. A $1,000,000 balance at 73 produces an RMD of roughly $37,700.
What happens if I miss an RMD?
Under SECURE 2.0 the penalty is 25% of the amount you failed to withdraw, reduced to 10% if you correct it promptly. That is down from the old 50% penalty, but it is still steep, so take the distribution on time.
How can I reduce the tax on my RMDs?
A Qualified Charitable Distribution (up to $108,000 in 2025) from an IRA at 70½ or older satisfies the RMD tax-free. Converting traditional balances to Roth before 73 shrinks future RMDs, and the still-working exception can delay 401(k) RMDs (not IRAs) while you remain employed and are not a 5% owner.
Sources
Regulator references
- IRS — Retirement plan and IRA RMD FAQs · Internal Revenue Service · 2025 · start age, deadlines, missed-RMD penaltyThe IRS FAQs on required minimum distributions, including the QLAC rules.Last verified: 2026-06-21
- IRS — Publication 590-B (Distributions from IRAs) · Internal Revenue Service · 2025 · Uniform Lifetime Table and RMD calculationPublication 590-B: distributions from IRAs, including required minimum distributions and the ordering rules.Last verified: 2026-06-21
- IRS — Qualified Charitable Distributions · Internal Revenue Service · 2025 · QCD limit ($108,000 in 2025) and RMD treatmentThe IRS FAQs on IRA distributions, including qualified charitable distributions.Last verified: 2026-06-21
Calculator unit tests · the assertions this page's worked example is checked against, and their last result
Changelog
- 2026-06-21 — initial publish (new format)
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Jordan Reeves
Founder of Talk Through Wealth. A software engineer for over a decade before turning to retirement planning, Jordan built the projection engine after watching family members get fragmented, country-by-country advice that never reconciled. He writes about retirement the way the engine computes it: month-by-month, lifetime-long, and skeptical of any rule of thumb that hasn't been run through the math.