RMD Rules 2026: New Starting Ages, Reduced Penalties, and Inherited IRA Rules

Required Minimum Distributions (RMDs) are the IRS's way of ensuring you eventually pay taxes on retirement savings. They kick in at a certain age, and the amount you must withdraw increases as you get older. Two laws did the damage: the original SECURE Act (December 2019) killed the stretch IRA, and SECURE 2.0 (signed 29 December 2022) raised the starting age and cut the penalty for missing one. The IRS's final regulations, issued in July 2024, settled the questions both laws left open. Here's exactly where that leaves you in 2026.

RMD Starting Ages: The Phase-In

Under SECURE Act 2.0, the RMD starting age is gradually increasing. This is the most significant RMD change in decades:

RMD Starting Age Timeline

For those born before January 1, 1951:

• RMD already started at age 72 (old rule)

For those born January 1, 1951 - December 31, 1959:

• RMD starts at age 73 (as of 2023)

For those born January 1, 1960 and later:

• RMD starts at age 75 (first affected year: 2035)

The 1959 glitch. SECURE 2.0 was drafted so that anyone born in 1959 could read their applicable age as both 73 and 75. IRS proposed regulations resolved it in favour of 73. If you were born in 1959, plan on 73.

What This Means for Different Ages in 2026

• Age 70: No RMD required (can continue delaying)
• Age 72: No RMD required (the old starting age no longer applies)
• Age 73: RMD required (if born 1951-1959)
• Age 75+: RMD required

Critical Implication: If you're 71-72 in 2026, you have additional years to let your retirement accounts grow tax-deferred before RMDs kick in. This is a major advantage if you don't need the money.

Why This Matters: Extended Tax-Deferred Growth

The later RMD start date allows your retirement savings to continue compounding without forced withdrawals:

Example: Three-Year Advantage (Age 70-73)

Scenario: You have $1 million in a traditional 401(k) at age 70, earning 6% annually

Old Rules (first RMD in the year you turned 70½):

• Age 70: forced withdrawal of $1,000,000 ÷ 27.4 (the Uniform Lifetime Table factor then in force) = $36,496
• That money leaves the tax shelter permanently and is taxed as ordinary income
• The account compounds on a smaller base every year thereafter

New Rules (first RMD at 73):

• Ages 70–72: the account grows untouched at 6% annually
• $1,000,000 × 1.06³ = $1,191,016 by age 73
• First RMD at 73 uses the current factor of 26.5: $1,191,016 ÷ 26.5 = $44,944

Note what the delay actually buys and what it doesn't. You get three more years of compounding on the full balance — but because the first RMD is calculated on a larger number, the withdrawal itself is bigger, and the tax is deferred rather than avoided. The real win is control: three extra years in which you decide the timing and size of taxable income, which is exactly the window in which Roth conversions are cheapest.

For someone with substantial retirement savings and no need to withdraw, that control is the benefit — not the deferral itself. You can size your own first RMD and the years that follow with the RMD calculator.

How RMDs Are Calculated

RMDs are calculated using:

1. Your account balance on December 31 of the prior year
2. An IRS life expectancy factor from Publication 590-B

Which table you use matters. Almost everyone uses the Uniform Lifetime Table (Appendix B, Table III). The exception: if your sole beneficiary for the whole year is a spouse more than 10 years younger than you, you use the Joint Life and Last Survivor Table instead, which produces a larger factor and therefore a smaller RMD. Inherited accounts use the Single Life Expectancy Table, a third table entirely.

The Formula

RMD = Prior Year December 31 Account Balance ÷ IRS Life Expectancy Factor

Example RMD Calculation (2026)

Scenario: You turn 75 during 2026, and your balances on December 31, 2025 were:

• Traditional IRA: $400,000
• 401(k): $300,000
• Total: $700,000

Step 1: Get the IRS uniform lifetime table factor for age 75:

• Factor: 24.6 (look up in Publication 590-B, Appendix C)

Step 2: Calculate RMD:

• RMD = $700,000 ÷ 24.6 = $28,455

Step 3: Timing:

• You must withdraw $28,455 by December 31, 2026
• You can take it all at once or in monthly/quarterly installments
• For inherited accounts, timing differs (see below)

Key RMD Rules

• Account balance date: Use December 31 of the prior year (so your 2026 RMD is based on your Dec 31, 2025 balance)
• Timing: Must be withdrawn by December 31 each year. Your first RMD only can be deferred to April 1 of the following year — the "required beginning date" — but then you take two RMDs in one calendar year, and stacking two years of income into one is usually a worse deal than paying it on schedule.
• Aggregation, and the trap inside it: IRAs (traditional, SEP, SIMPLE) are calculated separately but can be satisfied from any one of them — total the RMDs, take the whole amount from whichever account you like. 403(b)s can be aggregated with other 403(b)s the same way. 401(k)s cannot be aggregated at all: each 401(k) must pay its own RMD out of its own account, and you cannot cover a 401(k) shortfall from an IRA. Someone with three old 401(k)s from three employers has three separate obligations every year.
• Still working? If you're still employed at 73 and don't own more than 5% of the business, most plans let you defer RMDs from that employer's plan until you retire. This exception never applies to IRAs.

Penalties for Missing or Underpaying RMDs

This is where SECURE Act 2.0 made a major change. The penalties are significantly reduced:

Old Rule (Pre-2023)

• Penalty for missing an RMD: 50% of the amount you should have withdrawn
• If you were supposed to withdraw $28,455 but withdrew $0: Penalty = $14,228 (plus taxes on the $28,455 you eventually withdraw)
• This was harsh—the penalty matched the deferred tax

New Rule (SECURE 2.0 §302, from tax year 2023)

• Base penalty: 25% of the shortfall — the amount you should have withdrawn and didn't
• Reduced penalty: 10%, if you correct it inside the "correction window"
• The correction window runs to the end of the second taxable year after the year of the missed RMD (or earlier, if the IRS issues a deficiency notice first). To qualify you must actually take the missed distribution and file Form 5329 for the year you missed it
• Waived entirely: you can request a waiver for reasonable cause on Form 5329, attaching an explanation. The IRS grants these routinely for genuine errors — a custodian's mistake, illness, bad advice

Example: New Penalty Calculation

Scenario: You missed your 2025 RMD of $30,000 entirely

Corrected during 2026 or 2027, with Form 5329 filed:

• Penalty: 10% × $30,000 = $3,000
• Plus income tax on the $30,000 in the year you actually take it

Not corrected by the end of 2027 (window closed):

• Penalty: 25% × $30,000 = $7,500
• Plus income tax on the $30,000

Waiver granted for reasonable cause:

• Penalty: $0 — you still owe the income tax, but not the excise tax

Compared to the old 50% penalty of $15,000: correcting inside the window saves $12,000, and even missing the window saves $7,500.

Practical Impact

The reduced penalties mean:

• Missing an RMD is no longer financially catastrophic
• A two-year correction window exists, but it is a deadline, not a grace period — it closes
• The waiver request is the step people skip. Filing Form 5329 with a short, honest explanation costs nothing and very often works
• However, you should still try to take RMDs correctly — the income tax is owed either way

Inherited IRAs and the 10-Year Rule

The most dramatic change is for inherited IRAs (when you inherit an IRA from someone who died). This one is commonly misattributed: the 10-year rule came from the original SECURE Act of December 2019, and it applies to deaths after 31 December 2019. SECURE 2.0 did not create it. What the July 2024 final regulations did was settle how it works — and the answer was worse for beneficiaries than most had assumed.

Old Rule (deaths before 2020)

For non-spouse beneficiaries:

• Use the Single Life Expectancy Table to determine annual RMDs from the inherited IRA
• A beneficiary age 30 might take out only about 2% of the inherited balance annually
• The rest could stay invested and grow tax-deferred for 50+ years
• Example: inherit $1M at age 30 → take roughly $19,000 in year one, let the rest compound

Beneficiaries who inherited before 2020 keep this treatment. If you're already stretching an IRA from a 2018 death, nothing here changes for you.

For spouse beneficiaries:

• Could "treat as own" IRA and use own life expectancy
• Could defer withdrawals until the deceased's would-be RMD age

New Rule (SECURE Act 2019, deaths from 2020 onward)

For most non-spouse beneficiaries:

• 10-year rule: the account must be emptied by December 31 of the tenth calendar year following the year of death
• Whether you also owe annual RMDs in years 1–9 depends on the decedent's age at death — see the section below. This is the part the 2024 final regulations resolved, and not in beneficiaries' favour
• Example: inherit $1M in 2026 → the account must be at zero by 31 December 2036

Eligible designated beneficiaries — exempt from the 10-year rule, stretch over life expectancy instead:

1. Surviving spouse: can treat the IRA as their own, roll it over, or remain a beneficiary and defer until the deceased would have reached RMD age
2. Minor child of the decedent: stretches until age 21 (the final regulations fixed the age of majority at 21 regardless of state law), and then the 10-year clock starts — so the account must be empty by age 31. A grandchild or a niece does not qualify, only the decedent's own child
3. Disabled or chronically ill beneficiaries: stretch over life expectancy, using the statutory definitions in §72(m)(7) and §7702B(c)(2)
4. A beneficiary not more than 10 years younger than the decedent: stretch over life expectancy

Everyone else — adult children, grandchildren, siblings, friends — gets ten years. A trust named as beneficiary is its own analysis and frequently ends up worse than naming people directly.

Example: Inherited IRA Impact

Scenario: You inherit a $500,000 IRA from your parent who died in 2024. You're 40 years old.

Old Rule (Stretch IRA):

• Age 40-80 (40 years): Take ~1-3% annually ($5,000-$15,000/year)
• At age 80: Still have $200,000+ left growing tax-deferred
• Total taxable income from inheritance: Spread over decades

New Rule (10-Year Rule):

• The deadline is 31 December 2034 — the tenth calendar year after the 2024 death
• If your parent had already started RMDs, you must also take an annual distribution in each of 2025 through 2033
• Leave the balance to the last year and you create a tax bomb: $500,000-plus of ordinary income landing in a single return
• At 40, that lands squarely on top of your peak earning years — the worst possible timing

Comparison: The old rule allowed decades of tax-deferred growth. The new rule allows ten years, and forces the whole balance into a decade that, for most beneficiaries, is the highest-income decade of their lives. This is the strongest argument there is for the original owner doing Roth conversions while alive: a Roth inherited by your children is still subject to the 10-year rule, but every dollar comes out tax-free.

How Inherited IRAs Work Under the 10-Year Rule

Step 1: Death Occurs

• Your benefactor dies; you inherit their IRA

Step 2: Establish Inherited IRA Account

• Create separate "inherited IRA" account (do not roll to your own IRA)
• Keep deceased's name in the account title: "John Smith, deceased, IRA for benefit of [your name]"

Step 3: Distribution Period (Years 1–10)

• First establish whether annual RMDs are required — it depends entirely on whether the deceased had reached their required beginning date (see below)
• Then plan the withdrawals. "Leave it invested and deal with it later" feels right and is almost always the expensive choice: the account has to come out either way, and spreading it across ten returns beats concentrating it in one
• Take more in low-income years, less in high-income years. Nothing requires them to be equal

Step 4: Deadline (End of Year 10)

• Must withdraw the entire remaining balance by December 31 of the tenth calendar year after the year of death
• This is a hard deadline — the IRS will not extend it, and blowing it triggers the 25% excise tax on the whole remaining balance

Step 5: Tax Consequence

• A $500,000 balance withdrawn in one year is $500,000 of ordinary income in that year
• It can push you two or three brackets up, and if you're on Medicare it raises your IRMAA surcharge two years later — the 2026 thresholds start at $109,000 of MAGI single and $218,000 joint, and IRMAA is a cliff, so a single dollar over the line costs the full tier
• It can also drag you over the $200,000 / $250,000 MAGI line where the 3.8% net investment income tax starts applying to your other investment income

Strategy: Avoiding the Year 10 Tax Bomb

If you inherit an IRA, don't just leave it sitting until year 10. Plan for the tax:

Strategy 1: Spread Withdrawals

• Don't wait until year 10 to start withdrawals
• Begin withdrawing in year 2 or 3, taking a systematic amount each year
• By year 10, you're already in the habit and have spread the tax liability

Strategy 2: Fill the low-income years

• The most valuable years are the ones where your income dips: a sabbatical, a career break, an early retirement before Social Security starts
• Take a large distribution in those years and a small one in high-income years. Nothing requires the withdrawals to be equal
• Work out how much bracket room you have before the next threshold — that number, not a tenth of the balance, is your target for the year

Strategy 3: What you cannot do — pass a fresh 10 years to your own heirs

• This is widely believed and it is wrong. If you die partway through your inherited IRA's 10-year period, your successor beneficiary inherits the remainder of your window, not a new one
• Die in year 7 and your children have three years, not ten
• Naming multiple beneficiaries on the account splits the balance between them, which does spread the income — but each share still runs on the original clock

Strategy 4: Qualified charitable distribution — only if you are 70½

• A QCD can be made from an inherited IRA, but eligibility depends on the age of the beneficiary making it, not the age of the person who died
• A 45-year-old who inherits an IRA cannot use a QCD. A 72-year-old who inherits one can
• If you are old enough, a QCD from an inherited IRA both satisfies the distribution and keeps the amount out of your AGI entirely

Annual RMD Requirements During the 10-Year Period

This is the detail the July 2024 final regulations settled, and it changes real money: whether you owe annual RMDs during the 10 years depends entirely on whether the original owner died before or after their required beginning date.

If the owner died BEFORE their required beginning date:

• No annual RMDs in years 1–9. Take nothing, take everything, take it in any pattern you like
• The account must simply be at zero by 31 December of year 10
• This is the pure "10-year rule"

If the owner died ON OR AFTER their required beginning date:

• You must take an annual RMD in each of years 1 through 9, calculated on the Single Life Expectancy Table using your own age in the year after the death and reduced by one each year thereafter
• And the account must still be empty at the end of year 10
• The IRS waived enforcement of this requirement for 2021 through 2024 while the rules were unsettled. Enforcement began with the 2025 distribution year, so 2026 is a normal year — the annual RMD is due and the 25% excise tax applies if you skip it

What is the "required beginning date"? April 1 of the year after the year the owner reached their applicable RMD age — 73 for anyone born 1951–1959, 75 for 1960 and later. A parent who died at 74 in 2025 was past it. A parent who died at 71 was not. That single fact decides whether you owe anything in years 1–9.

The reason it matters more than it sounds: those forced annual withdrawals are usually small relative to the balance, so they do very little to defuse the year-10 bomb. You will almost always want to withdraw more than the required minimum in the early years anyway.

Roth IRAs are the exception. A Roth IRA owner never has a required beginning date, so an inherited Roth is always on the pure 10-year rule with no annual requirement — and everything that comes out is tax-free. Beneficiaries of inherited Roths should generally take nothing until year 10 and let it compound.

Qualified Charitable Distributions (QCDs)

For those aged 70.5+, there's a valuable strategy that interacts with RMDs:

QCD Basics

• Allows a direct transfer from the IRA custodian to a qualified charity, excluded from your income entirely. It must never pass through your hands — a cheque made out to you and forwarded to the charity is not a QCD
• Counts toward the RMD requirement without adding a dollar to your AGI
• Age 70½ exactly, not the calendar year you turn 70½ — a QCD made the day before your half-birthday doesn't count
• Applies to IRAs only, not 401(k)s or 403(b)s. Roll plan money to an IRA first if you want to use one
• SECURE 2.0 indexed the annual cap for inflation. It was $108,000 for 2025; check IRS Publication 590-B for the current year's figure before you set the amount
• Not available from an ongoing SEP or SIMPLE IRA that is still receiving employer contributions

Why the AGI point matters more than the deduction. A charitable deduction only helps if you itemise, and with the 2026 standard deduction at $16,100 single and $32,200 joint — plus $2,050 more per person at 65, and the $6,000 OBBBA senior deduction — most retirees don't. A QCD works whether you itemise or not, because it never enters your income in the first place. That also keeps it out of the AGI that determines IRMAA and the taxability of your Social Security.

Example

Scenario: You're 75, required RMD is $30,000, AGI is $150,000

Option A: Traditional RMD

• Withdraw $30,000
• Report as taxable income: $150,000 + $30,000 = $180,000
• Crosses the 2026 IRMAA threshold of $109,000 single, so your Medicare Part B and D premiums rise two years later

Option B: QCD

• Direct $30,000 from the IRA custodian to the charity
• AGI stays at $150,000 — the QCD never enters it
• RMD satisfied; no additional income tax; no change to the IRMAA tier the $30,000 would have pushed you into
• Charity receives the full $30,000

QCD is much better if: you were going to give the money away anyway. It is not a way to reduce tax on money you want to keep — you are giving up the entire $30,000 to avoid the tax on it.

Roth Accounts and RMDs

A critical advantage of Roth accounts:

Traditional 401(k): subject to RMDs at 73 or 75 Roth 401(k): no lifetime RMDs — SECURE 2.0 §325 removed them from 2024 onward. Before that, Roth 401(k)s did have RMDs, which is why the standard advice used to be to roll one to a Roth IRA at retirement. That reason is gone Traditional IRA: subject to RMDs at 73 or 75 Roth IRA: no lifetime RMDs, ever — the original owner is never forced to take a dollar

One correction to a common belief: heirs of a Roth IRA still face the 10-year rule. "Passed to heirs tax-free" is true of the tax, not of the timing — a non-spouse beneficiary must still empty the account within ten years. What they don't face is any annual requirement or any tax bill, which is why an inherited Roth is worth substantially more than an inherited traditional IRA of the same size.

This is the case for Roth conversions during the gap between retiring and RMD age. Every dollar converted is a dollar that never generates an RMD, never inflates your IRMAA tier, and never lands on your children as ordinary income.

Key Takeaways

1. RMDs start at 73 if you were born 1951–1959 and at 75 if you were born in 1960 or later — the IRS resolved the 1959 drafting ambiguity in favour of 73.

2. The missed-RMD excise tax is 25%, falling to 10% if you correct inside the two-year window — and a reasonable-cause waiver on Form 5329 can eliminate it entirely.

3. The 10-year rule came from the 2019 SECURE Act, not SECURE 2.0 — it applies to deaths after 31 December 2019, and the account must be empty by 31 December of the tenth calendar year after the death.

4. If the original owner died on or after their required beginning date, the beneficiary also owes an annual RMD in years 1–9 — enforcement of this began with the 2025 distribution year, after four years of IRS waivers.

5. A successor beneficiary inherits the remainder of your 10-year window, not a fresh one — you cannot reset the clock by passing an inherited IRA on.

6. QCDs satisfy the RMD without touching AGI — which protects your IRMAA tier and the taxability of your Social Security, and works whether or not you itemise.

7. Roth accounts have no lifetime RMDs, but inherited Roths still face the 10-year rule — tax-free, and with no annual requirement, so let them compound to year 10.

If you're approaching RMD age or have inherited an IRA, work with a CPA or financial advisor to apply this to your specific situation.

FAQ

Can I take my RMD from just one account if I have several?

It depends on the account type, and this is where people get penalised. All your traditional, SEP and SIMPLE IRAs are calculated separately but satisfied jointly — add up the individual RMDs and take the total from whichever IRA you prefer. 403(b)s work the same way among themselves. 401(k)s do not aggregate at all: every 401(k) must distribute its own RMD from its own account, and you cannot cover one from an IRA or from another 401(k). If you have old 401(k)s at three former employers, that's three obligations every year — which is the single best argument for consolidating them before you turn 73.

I inherited an IRA in 2021 and never took annual distributions. Am I in trouble?

Probably not. The IRS waived enforcement of the annual RMD requirement for inherited accounts for 2021 through 2024 while the regulations were unsettled, and it confirmed that missed distributions in those years are not penalised. Enforcement started with the 2025 distribution year. So: if the original owner had reached their required beginning date, you owe an annual RMD for 2025 and for 2026, and the 25% excise tax applies if you skip them. The 10-year deadline was never waived — a 2021 death still means the account must be empty by 31 December 2031, and you have lost four of the years you could have used to spread the income.

Does a Roth conversion count toward my RMD?

No, and getting this backwards is expensive. Once you're RMD age, the RMD is the first money out of the account each year and is not an eligible rollover distribution — it cannot be converted. Take the full RMD first, then convert whatever else you want on top. Converting an amount that included the RMD creates an excess contribution in the Roth, which carries its own 6% annual excise tax until you unwind it. If you want conversions to be simple, do them in the years before RMDs start.

Do I have to sell investments to take an RMD?

No. You can satisfy an RMD with an in-kind transfer — move shares from the IRA to a taxable brokerage account instead of cash. You still owe ordinary income tax on the fair market value on the transfer date, and that value becomes your new cost basis in the taxable account, so future growth is taxed at capital gains rates rather than ordinary rates. This is genuinely useful when you don't want to sell into a down market, or when you want to keep a position you like. If you later sell, the basis question matters — the same one that governs inherited stock and its stepped-up basis, and the two are frequently confused: inherited stock in a taxable account gets a basis step-up at death, while an inherited IRA never does.

Sources

• IRS Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs) — life expectancy tables, QCD rules, inherited IRA distributions.
• IRS final regulations on required minimum distributions, published July 2024 (T.D. 10001) — annual RMDs during the 10-year period, age of majority at 21, eligible designated beneficiaries.
• SECURE Act of 2019 (Public Law 116-94) §401 — the 10-year rule for deaths after 31 December 2019.
• SECURE 2.0 Act of 2022 (Public Law 117-328) §107 (ages 73 and 75), §302 (25%/10% excise tax), §325 (no lifetime RMDs for Roth plan accounts from 2024).
• IRS Form 5329 and Instructions — reporting the missed-RMD excise tax and requesting a waiver for reasonable cause.
• IRS Notices 2022-53, 2023-54, 2024-35 — the waiver of the annual inherited-IRA RMD requirement for 2021 through 2024.
• IRS Notice 2025-67 and Rev. Proc. 2025-32 — 2026 standard deduction and IRMAA thresholds.