Required Minimum Distributions Calculator

Required Minimum Distributions (RMDs) are mandatory annual withdrawals from your retirement accounts once you reach a certain age. The IRS requires these distributions to ensure that tax-deferred retirement savings are eventually taxed.

Understanding RMDs in 2026: What You Need to Know 

What Accounts Require RMDs?

Accounts Subject to RMDs:

• Traditional IRAs
• SEP IRAs
• SIMPLE IRAs
• 401(k) plans
• 403(b) plans
• 457(b) plans
• Profit-sharing plans
• Other defined contribution plans

Accounts NOT Subject to RMDs:

• Roth IRAs (during owner’s lifetime)
• Roth 401(k)s (while still employed with the company)
• Health Savings Accounts (HSAs)

The Cost of Getting It Wrong

Failing to take your full RMD results in severe penalties:

Real Example: If your RMD was $10,000 and you withdrew $0, you could owe a $2,500 penalty (or $1,000 if corrected quickly). This is in addition to the income tax you’ll owe on the distribution.

RMD Age Requirements: When Must You Start? 

The SECURE Act and SECURE 2.0 Act changed RMD ages significantly. Your required beginning date depends on your birth year.

RMD Age Table by Birth Year

The April 1st Rule: First-Year RMD Exception

Your first RMD can be delayed until April 1 of the year after you turn 73 (or 75 if born in 1960+). However, this creates a “double distribution” year.

Example Scenario:

• Sarah turns 73 on June 15, 2026
• She can take her 2026 RMD anytime in 2026, OR delay until April 1, 2027
• If she delays to 2027, she must also take her 2027 RMD by December 31, 2027
• This means two taxable distributions in one year, potentially pushing her into a higher tax bracket

The “Still Working” Exception

If you’re still employed by the company sponsoring your 401(k) and own less than 5% of the company, you can delay RMDs from that specific plan until you retire.

Important Limitations:

• This exception does NOT apply to IRAs
• Does not apply if you own 5% or more of the company
• Only applies to your current employer’s plan, not old 401(k)s

How to Calculate Your RMD: The Core Formula 

The Basic RMD Formula

RMD = Account Balance (December 31 of prior year) ÷ Life Expectancy Factor

Step 1: Find Your Account Balance

You must use the account balance as of December 31 of the previous year.

Example for 2026 RMD:

• Use balance as of December 31, 2025
• Do NOT use current balance
• Your IRA custodian should provide this on Form 5498

Multiple Accounts: If you have multiple IRAs, you must calculate the RMD for each account separately, but you can withdraw the total from one or more accounts. For 401(k)s, you must take the RMD separately from each 401(k) account.

Step 2: Determine Your Life Expectancy Factor

The IRS provides three life expectancy tables. Most people use the Uniform Lifetime Table.

Which Table Should You Use?

Step 3: Divide and Withdraw

Once you have both numbers, divide the account balance by the life expectancy factor. The result is your RMD for the year.

IRS Life Expectancy Tables for 2026 

Uniform Lifetime Table (Most Common)

This table applies to most IRA owners. The IRS updated these tables in 2022, resulting in smaller RMDs due to increased life expectancies.

Joint Life and Last Survivor Expectancy Table (Younger Spouse)

Use this table only if your spouse is your sole beneficiary and is more than 10 years younger than you. This table provides larger factors (smaller RMDs).

Example Ages and Factors:

Full table available in IRS Publication 590-B

Single Life Expectancy Table (Inherited IRAs)

This table is primarily used by beneficiaries of inherited IRAs who are taking life expectancy distributions.

Inherited IRA RMDs: Navigating Complex Rules 

Inherited IRA rules are among the most confusing aspects of RMD calculations, especially after the SECURE Act changes.

Two Critical Questions

Question 1: When did the original owner die?

• Before 2020: Old “stretch IRA” rules may apply
• 2020 or after: SECURE Act rules apply

Question 2: What type of beneficiary are you?

Beneficiary Categories Under SECURE Act

Eligible Designated Beneficiaries (EDBs)

Can stretch distributions over their life expectancy:

1. Surviving spouse (most flexible options)
2. Minor child of the deceased (until age of majority, then 10-year rule applies)
3. Disabled individual (as defined by IRS)
4. Chronically ill individual (as defined by IRS)
5. Individual not more than 10 years younger than the deceased

Non-Eligible Designated Beneficiaries

Subject to the 10-Year Rule:

• Adult children and grandchildren
• Siblings more than 10 years younger
• Friends and distant relatives
• Most trusts (depending on structure)

The 10-Year Rule: What It Really Means

The 10-year rule has two different applications depending on whether the original owner had started taking RMDs.

Scenario A: Owner Died Before Required Beginning Date (RBD)

Rule: No annual RMDs required, but the account must be emptied by December 31 of the 10th year after death.

Example:

• Michael’s father died in 2024 at age 68 (before RMD age)
• Michael inherited a $500,000 IRA
• Michael can take distributions however he wants from 2024-2033
• He could take $0 for years 1-9, then $500,000+ (with growth) in year 10
• Or spread it out: $50,000 per year
• The account must be empty by December 31, 2034

Scenario B: Owner Died On or After Required Beginning Date

Rule: Annual RMDs required for years 1-9, plus the account must be empty by year 10.

Example:

• Jennifer’s mother died in 2024 at age 78 (already taking RMDs)
• Jennifer inherited a $400,000 IRA
• Jennifer must take RMDs annually using the Single Life Expectancy Table
• Jennifer is 52 in 2025 (year after death)
• Her starting factor is 33.5 (age 53 in Single Life Table)

Annual Calculation:

By 2034, the account must be fully distributed

Special Rules for Surviving Spouses

Surviving spouses have the most flexible options:

Option 1: Treat as Inherited IRA

• Take RMDs based on spouse’s life expectancy
• Can delay RMDs until deceased would have been 73

Option 2: Roll Over to Own IRA

• Treat the IRA as your own
• RMDs based on your age and RMD rules
• Best if you’re younger than RMD age

Option 3: Disclaim the Inheritance

• Rare, but can be useful for estate planning
• Must be done within 9 months
• Assets pass to contingent beneficiaries

Real-World Example: Lisa (age 68) inherits her husband John’s (age 74) $600,000 IRA in 2026.

If she treats it as inherited:

• Must start RMDs immediately using her life expectancy
• More administrative complexity

If she rolls it over (usually better):

• No RMDs until she turns 73 (age 73 for her)
• Simpler administration
• Can name her own beneficiaries

RMD Calculation Examples: Real-World Scenarios 

Example 1: Standard First-Year RMD

Profile: Robert, age 73, single, turning 73 in March 2026

Account Details:

• Traditional IRA balance on December 31, 2025: $250,000
• Uses Uniform Lifetime Table

Calculation:

RMD = $250,000 ÷ 26.5 = $9,433.96

Robert’s Options:

• Take the full $9,433.96 anytime in 2026
• Can take more if he wants (no maximum)
• Can split into monthly withdrawals: $786.16/month

Tax Implications:

• The $9,433.96 is added to his other income
• Taxed at his ordinary income tax rate
• If Robert is in the 22% bracket: $2,075 in federal tax

Example 2: Multiple IRAs

Profile: Susan, age 76, retired teacher

Account Details:

• Traditional IRA #1: $180,000
• Traditional IRA #2: $90,000
• Rollover IRA from 403(b): $130,000
• Total: $400,000

Step 1: Calculate Each RMD

IRA #1: $180,000 ÷ 23.7 = $7,594.94

IRA #2: $90,000 ÷ 23.7 = $3,797.47

Rollover IRA: $130,000 ÷ 23.7 = $5,485.23

Total RMD: $16,877.64

Step 2: Choose Withdrawal Strategy

Susan can withdraw the total $16,877.64 from:

• One account only
• Split proportionally across all three
• Any combination that totals $16,877.64

Susan’s Decision: She withdraws $16,877.64 from IRA #2 (which has the highest expense ratio), leaving her other accounts to grow.

Example 3: Younger Spouse Beneficiary

Profile: David, age 78, married to Anna, age 60

Account Details:

• Traditional IRA balance: $500,000
• Anna is sole beneficiary
• Anna is 18 years younger (more than 10 years)

Calculation Using Joint Life Table:

Instead of using factor 22.0 from Uniform Lifetime Table, David uses the Joint Life and Last Survivor Table, finding the factor for age 78/60.

Factor for ages 78/60: 26.1

RMD = $500,000 ÷ 26.1 = $19,157.09

Comparison:

• Using Uniform Lifetime Table: $500,000 ÷ 22.0 = $22,727.27
• Using Joint Life Table: $19,157.09
• Savings: $3,570.18 less required distribution

Example 4: Inherited IRA with Annual RMDs

Profile: Carlos, age 55, inherited his father’s IRA in 2024

Account Details:

• Father died at age 79 (was taking RMDs)
• Inherited IRA balance on December 31, 2025: $300,000
• Carlos’s age in year after death (2025): 56

Year 1 (2025) Calculation:

Look up age 56 in Single Life Table: 30.5

RMD = $300,000 ÷ 30.5 = $9,836.07

Year 2 (2026) Calculation:

Subtract 1 from original factor: 30.5 – 1 = 29.5

Assume balance grew to $310,000

RMD = $310,000 ÷ 29.5 = $10,508.47

Important: Carlos doesn’t look up his new age each year. He uses the original factor (30.5) and subtracts 1 for each subsequent year.

Example 5: 401(k) RMD with Still-Working Exception

Profile: Maria, age 74, still employed part-time

Account Details:

• Current employer 401(k): $150,000 (owns 2% of company)
• Old employer 401(k): $200,000
• Traditional IRA: $100,000

RMD Requirements:

Key Points:

• Maria can delay RMDs from her current employer’s 401(k)
• Must take RMDs from old 401(k) and IRA
• Cannot combine 401(k) RMD with IRA RMD (must take separately)

Plan your retirement savings accurately using our 401k Calculator to estimate contributions, growth, and future account value.

Example 6: First Year with Double Distribution

Profile: Thomas, age 73 in August 2026

Account Details:

• IRA balance December 31, 2025: $400,000
• IRA balance December 31, 2026: $425,000 (projected)

Option A: Take 2026 RMD in 2026

2026 RMD = $400,000 ÷ 26.5 = $15,094.34 (taken in 2026)

2027 RMD = $425,000 ÷ 25.5 = $16,666.67 (taken in 2027)

• Tax Impact: One distribution per year

Option B: Delay 2026 RMD to April 1, 2027

2026 RMD = $400,000 ÷ 26.5 = $15,094.34 (taken by April 1, 2027)

2027 RMD = $425,000 ÷ 25.5 = $16,666.67 (taken by Dec 31, 2027)

Total 2027 distributions: $31,761.01

• Tax Impact: $31,761 added to 2027 income

Thomas’s Analysis:

If Thomas is in the 12% tax bracket with $31,761 in other income:

• Option A keeps him in 12% bracket both years
• Option B: The extra $15,094 could push him into 22% bracket in 2027
• Decision: Take first RMD in 2026 to spread tax liability

Common Mistakes to Avoid 

Mistake 1: Using the Wrong Balance

The Error: Using current account balance instead of December 31 of prior year

Real Example: Mark calculated his 2026 RMD using his October 2026 balance of $280,000. He should have used his December 31, 2025 balance of $250,000.

Result: He withdrew $10,566.04 instead of the required $9,433.96, unnecessarily increasing his taxable income by $1,132.08.

How to Avoid: Your IRA custodian sends Form 5498 showing your prior year-end balance. Wait for this form or check your December statement.

Mistake 2: Forgetting About All Accounts

The Error: Calculating RMD for only one IRA when you have multiple

Real Example: Patricia took her RMD from her Schwab IRA but forgot about her old Fidelity IRA from a previous employer.

Result: She missed $4,500 in required distributions, triggering a $1,125 penalty (25% of the shortfall).

How to Avoid:

• Create a master list of all retirement accounts
• Set calendar reminders for each account
• Consider consolidating IRAs to simplify

Mistake 3: Missing the December 31 Deadline

The Error: Initiating RMD too late in December

Real Example: John requested his RMD on December 28, 2026, but due to market holidays and processing time, it settled on January 2, 2027.

Result: The IRS considers this a 2027 distribution, meaning John didn’t satisfy his 2026 RMD.

How to Avoid:

• Request RMDs by December 15 to allow processing time
• Consider automatic monthly or quarterly distributions
• Account for weekends and holidays

Mistake 4: Confusing 401(k) and IRA Rules

The Error: Thinking you can aggregate 401(k) RMDs like IRA RMDs

Real Example: Sandra had two old 401(k)s with RMDs of $8,000 and $5,000. She withdrew $13,000 from one account, thinking she satisfied both.

Result: She failed to take the $5,000 RMD from the second 401(k), triggering a $1,250 penalty.

How to Avoid: Remember:

• IRAs: Calculate separately, withdraw from any combination
• 401(k)s: Calculate separately, must withdraw from each specific account

Mistake 5: Wrong Table for Younger Spouse

The Error: Using Uniform Lifetime Table when spouse is 10+ years younger

Real Example: Frank (age 80) has a wife Sarah (age 65) who is his sole beneficiary. He used the Uniform Lifetime Table (factor 20.2) instead of Joint Life Table (factor 23.7).

Result: He withdrew $24,752 instead of $21,097—an unnecessary $3,655 that increased his tax bill by about $803 (at 22% rate).

How to Avoid:

• Verify beneficiary designations
• Calculate age difference
• Use Joint Life Table if spouse is sole beneficiary and 10+ years younger

Use our Amortization Calculator to break down loan payments, interest costs, and principal balances over the full repayment schedule.

Mistake 6: Inherited IRA Confusion

The Error: Not understanding when annual RMDs are required under the 10-year rule

Real Example: Amy inherited her father’s IRA in 2024. He had been taking RMDs. She thought the 10-year rule meant no annual RMDs, so she took nothing in 2025 or 2026.

Result: She missed two years of required annual RMDs, totaling about $18,000 in shortfalls and $4,500 in potential penalties.

How to Avoid:

• Determine if the original owner had started RMDs
• If yes, you must take annual RMDs for years 1-9
• Consult the IRA custodian or a tax professional

Mistake 7: Roth IRA Confusion

The Error: Thinking Roth IRAs require RMDs during your lifetime

Real Example: Helen withdrew money from her Roth IRA, thinking she had to take an RMD.

Result: While not penalized, she unnecessarily removed tax-free money that could have continued growing.

How to Avoid: Remember:

• Roth IRAs: No RMDs during owner’s lifetime
• Roth 401(k)s: DO require RMDs (unless rolled to Roth IRA)
• Inherited Roth IRAs: DO require distributions

State-by-State Tax Considerations

RMDs are subject to federal income tax, but state tax treatment varies significantly.

States with NO Income Tax (No State Tax on RMDs)

These nine states don’t tax RMDs at all:

• Alaska
• Florida
• Nevada
• New Hampshire (only taxes dividends/interest, ending 2025)
• South Dakota
• Tennessee
• Texas
• Washington
• Wyoming

States with Special Retirement Income Exemptions

States That Fully Tax RMDs

These states tax RMDs as ordinary income with no special exemptions:

• California (tax rates: 1% – 13.3%)
• Connecticut (3% – 6.99%)
• Massachusetts (5%)
• Minnesota (5.35% – 9.85%)
• New Jersey (1.4% – 10.75%)
• New York (4% – 10.9%)
• Oregon (4.75% – 9.9%)
• Vermont (3.35% – 8.75%)

Tax Planning Example

Scenario: Richard has a $400,000 IRA, age 75, faces a $16,260 RMD

Annual Savings by Moving to Tax-Free State: Up to $1,512/year

Note: Calculate your total earnings accurately with our Annual Income Calculator to understand yearly salary, bonuses, and additional income sources. 

RMD Planning Strategies: Minimize Taxes and Maximize Wealth 

Strategy 1: Qualified Charitable Distributions (QCDs)

What It Is: Direct transfer from your IRA to a qualified charity, counting toward your RMD but excluded from taxable income.

Key Rules:

• Must be age 70½ or older
• Maximum $105,000 per year (2024, indexed for inflation)
• Must go directly from IRA to charity
• Not available for 401(k)s or SEP IRAs

Real Example: Margaret, age 75, has an RMD of $18,000. She donates $10,000 via QCD to her church.

Without QCD:

• Taxable income: $18,000
• Standard deduction used for other purposes
• Tax at 22%: $3,960

With QCD:

• Taxable income: $8,000
• QCD satisfies $10,000 of RMD
• Tax at 22%: $1,760
• Tax savings: $2,200

Additional Benefits:

• Doesn’t count toward AGI (helps with Medicare premiums)
• Can satisfy entire RMD if donated amount equals or exceeds RMD
• Can help itemizers and non-itemizers alike

Strategy 2: Roth Conversions Before RMDs Begin

What It Is: Converting Traditional IRA funds to Roth IRA before RMD age, paying taxes now at potentially lower rates.

When It Makes Sense:

• You’re in a low tax bracket now (retired but before RMD age)
• You expect higher tax rates in the future
• You want to leave tax-free money to heirs

Real Example: Tom retires at age 65 with $500,000 in his traditional IRA. He has 8 years before RMDs begin at age 73.

Strategy: Convert $50,000 per year for 8 years

Result at Age 73:

• Traditional IRA remaining: $150,000 (after growth)
• Roth IRA: $522,079
• Total taxes paid: $48,000
• Smaller future RMDs from smaller Traditional IRA
• Roth grows tax-free for life

Strategy 3: Delay First RMD Strategically

When to Delay to April 1:

• You have unusually low income in the year after you turn 73
• You’re still working and will have less income next year
• You’re planning a Roth conversion and need more space in the current year’s tax bracket

When NOT to Delay:

• You’re already near a tax bracket threshold
• You have predictable income year-to-year
• You want to spread distributions evenly

Example: Linda turns 73 in March 2026. Her 2026 income is $60,000, but she expects only $35,000 in 2027 (part-time work ends).

Strategy: Delay her $12,000 RMD to early 2027

• 2026: Only $60,000 taxable income
• 2027: $35,000 + $12,000 (2026 RMD) + $12,500 (2027 RMD) = $59,500
• Both years stay in 12% bracket
• No disadvantage to taking two distributions in 2027

Strategy 4: Consider Inherited IRA Timing

For 10-Year Rule (No Annual RMDs):

You can time distributions to minimize taxes.

Example Strategy: Alex inherited $300,000 in 2024. He’s in the 24% tax bracket normally but expects lower brackets in retirement.

Alternative Strategy: Take $30,000 annually to “fill up” the 22% bracket before it jumps to 24%, spreading tax burden more evenly.

Strategy 5: Asset Location for RMDs

Strategy: Hold tax-inefficient investments in Roth accounts and tax-efficient investments in Traditional IRAs to minimize RMD tax impact.

Tax-Efficient Assets (good for Traditional IRAs):

• Index funds with low turnover
• Tax-managed funds
• Individual stocks held long-term
• Municipal bonds

Tax-Inefficient Assets (better for Roth or taxable):

• Bonds and bond funds
• REITs
• High-dividend stocks
• Actively managed funds with high turnover

Example: Before optimization:

• Traditional IRA: $300,000 in high-dividend REITs (8% yield = $24,000 dividends)
• Roth IRA: $200,000 in growth stocks (minimal dividends)

After optimization:

• Traditional IRA: $300,000 in S&P 500 index fund (2% yield = $6,000 dividends)
• Roth IRA: $200,000 in REITs (8% yield = $16,000 tax-free income)

RMD Impact:

• At age 75 with factor 24.6: RMD = $12,195 (mostly capital gains)
• Versus: RMD of $12,195 (mostly ordinary dividend income)
• Tax savings: approximately $1,463 annually (at 12% vs 24% rates)

Strategy 6: Net Unrealized Appreciation (NUA) for Company Stock

What It Is: Special tax treatment for company stock in 401(k) plans allowing you to pay capital gains rates instead of ordinary income rates on appreciation.

How It Works:

1. Take lump-sum distribution from 401(k)
2. Transfer company stock to taxable account
3. Pay ordinary income tax only on original cost basis
4. Pay capital gains tax on appreciation only when sold

Real Example: David has $200,000 of company stock in his 401(k):

• Original basis: $50,000
• Current value: $200,000
• Appreciation: $150,000

Without NUA:

• Rolls everything to IRA
• RMD at age 75: $200,000 ÷ 24.6 = $8,130
• All taxed as ordinary income (22% = $1,789)

With NUA:

• Pays ordinary income tax on $50,000 basis now (22% = $11,000)
• Moves $200,000 stock to taxable account
• When sold, $150,000 taxed at long-term capital gains (15% = $22,500)
• Total tax: $33,500 vs. $44,000 over time
• Savings: $10,500+

Strategy 7: Offsetting RMDs with Tax-Loss Harvesting

Strategy: Use losses in taxable accounts to offset the tax impact of RMDs.

Example: Eleanor has an RMD of $20,000 and taxable investment accounts with unrealized losses.

Action Plan:

1. Take required $20,000 RMD (adds to taxable income)
2. Sell losing positions in taxable account (realize $10,000 loss)
3. Reinvest in similar but not identical investments
4. Net result: Only $10,000 of RMD creates tax liability
5. Can carry forward excess losses to future years

Tax Impact:

• RMD taxed at 22%: $4,400
• Tax-loss savings (22% of $10,000): $2,200
• Net tax: $2,200
• Effective tax rate on RMD: 11%

Frequently Asked Questions

Can I take my RMD in monthly installments?

Yes. You can split your RMD into any frequency you prefer, as long as the total for the year meets the requirement. Many retirees choose monthly distributions to mimic a paycheck.

Example Setup:

• Annual RMD: $12,000
• Monthly withdrawal: $1,000
• Set up automatic distribution with your custodian
• Easier budgeting and tax withholding

What if I have both a Traditional IRA and a Roth IRA?

Roth IRAs do not require RMDs during your lifetime. Only your Traditional IRA, SEP IRA, and SIMPLE IRA require RMDs. However, if you inherit a Roth IRA, beneficiaries must take distributions.

Can I use my RMD to fund a Roth IRA?

Not directly as an RMD, but here’s what you can do:

1. Take your RMD (counts as income)
2. If you have earned income, contribute to a Roth IRA separately (up to $8,000 in 2026 if 50+)
3. The RMD itself cannot be “converted” to Roth

What happens if I take more than my RMD?

Taking more than your RMD is allowed and common. However:

• Excess does NOT carry forward to next year
• You must still calculate and take next year’s RMD separately
• All distributions are taxable (whether required or excess)

Example:

• 2026 RMD: $10,000
• You withdraw: $15,000
• 2027 RMD: Must calculate based on new December 31, 2026 balance
• The extra $5,000 does not count toward 2027

How do RMDs affect my Medicare premiums?

RMDs increase your Modified Adjusted Gross Income (MAGI), which can push you into higher Medicare premium brackets (IRMAA surcharges).

2026 Medicare Part B IRMAA Brackets:

Planning Tip: If you’re close to a threshold, consider QCDs to reduce your MAGI without increasing your taxable income.

What if my IRA custodian calculates my RMD incorrectly?

You are ultimately responsible for taking the correct RMD, even if your custodian provides an incorrect calculation. Best practices:

• Double-check the calculation yourself
• Verify they’re using the correct December 31 balance
• Confirm they’re using the right life expectancy table
• Keep documentation of your calculations

If you discover an error after taking a distribution, consult a tax professional immediately to determine if correction is needed.

Can I donate my RMD to a Donor-Advised Fund?

Partially. You can make a QCD to a donor-advised fund up to a one-time $53,000 limit (2026, indexed for inflation), but this is subject to special rules:

• One-time election
• Must be to a new DAF or existing DAF that never received non-QCD contributions
• Complex rules apply

For annual charitable giving flexibility, direct QCDs to public charities (churches, schools, etc.) are simpler and have a $105,000 annual limit.

How do required minimum distributions work with annuities?

If your IRA or 401(k) holds an annuity, RMD calculations become complex:

For Non-Annuitized Contracts:

• Calculate RMD based on account value
• Withdraw from cash or surrender part of annuity

For Annuitized Contracts:

• Regular annuity payments may satisfy RMD requirement
• Annuity payment must equal or exceed calculated RMD
• If insufficient, additional withdrawal required

Example: George has a $300,000 IRA in an annuity providing $10,000 annually. His RMD is $12,244. He must take an additional $2,244 from other IRA accounts or surrender part of the annuity.

What’s the difference between RMD age and retirement age?

They are completely different:

Social Security Full Retirement Age:

• Age 66-67 depending on birth year
• When you can claim full Social Security benefits

RMD Age:

• Age 73 (born 1951-1959) or 75 (born 1960+)
• When you must begin withdrawing from retirement accounts

You can retire at any age, but RMDs don’t begin until age 73/75 regardless of employment status (except for current employer 401(k) with still-working exception).

Can I correct a missed RMD?

Yes, but act quickly:

Immediate Steps:

1. Take the missed distribution as soon as possible
2. File Form 5329 with your tax return
3. Request penalty waiver by showing reasonable cause
4. Pay any tax owed on the distribution

IRS Self-Correction Program:

• Withdraw the missed amount
• File Form 5329
• Write “RC” (reasonable cause) in penalty section
• Attach explanation
• Many simple errors are waived, especially first-time mistakes

Penalty Reduction:

• 25% penalty can be reduced to 10% if corrected within 2 years
• IRS often waives penalties for reasonable cause (illness, custodian error, natural disaster)

How does divorce affect RMDs?

Divorce creates complex RMD situations:

If You Receive a Portion of Ex-Spouse’s IRA:

• Can roll over to your own IRA (no RMD until your RMD age)
• Treat as inherited IRA if not rolled over (immediate RMD requirements may apply)

If Your Ex-Spouse Was Your Beneficiary:

• Update beneficiary designations immediately
• Check if you should switch from Joint Life Table to Uniform Lifetime Table
• Recalculate RMDs based on new situation

QDROs (Qualified Domestic Relations Orders) for 401(k)s:

• Similar rules but more complex
• May require attorney assistance
• Each divided portion has its own RMD requirements

What happens to RMDs in a market downturn?

Your RMD is based on the prior year’s December 31 balance, which means:

During Market Decline: You might have to withdraw a higher percentage of current value.

Example:

• December 31, 2025 balance: $500,000
• 2026 RMD (age 75): $500,000 ÷ 24.6 = $20,325
• Current balance (after market drop): $425,000
• You must still withdraw $20,325 (now 4.8% instead of 4.1%)

Strategies:

• Take RMD early in the year before further declines
• Take in-kind distributions (transfer assets instead of selling)
• Rebalance portfolio as you take RMD

Can I take my RMD “in-kind”?

Yes. You can transfer assets directly from your IRA to a taxable account instead of selling and taking cash.

Benefits:

• No need to sell in down market
• Preserve positions you want to keep
• Continue holding the same investments

How It Works:

1. Request in-kind distribution from custodian
2. Specify which assets to transfer
3. Assets transfer at current market value
4. That value counts toward RMD and is taxable
5. Your cost basis in taxable account