Required Minimum Distribution Rules for 2026

Required minimum distribution rules are simple enough to explain in a client meeting and complicated enough to create operational risk for an advisory firm. In 2026, most clients still need to understand the same core question: when must they start withdrawing from tax-deferred retirement accounts, how much must they take, and what happens if they miss the deadline? For advisors, the harder work is not defining an RMD. It is coordinating household accounts, custodian data, beneficiary situations, taxes, charitable goals, Medicare thresholds, and documentation before December becomes a fire drill.

The 2026 RMD starting age

For most retirement account owners, RMDs begin at age 73. Clients born in 1960 or later generally move to age 75 under SECURE 2.0 timing, which creates a planning window for younger retirees who have not yet reached required beginning dates. The first RMD is typically due by April 1 of the year after the client reaches the applicable RMD age. Every later annual RMD is due by December 31.

That April 1 option deserves careful explanation. Delaying the first RMD can help a client postpone income from one tax year into the next, but it can also force two RMDs into the same calendar year: the delayed first distribution by April 1 and the second distribution by December 31. For high-income retirees, that may affect marginal brackets, Medicare IRMAA exposure, taxation of Social Security benefits, and estimated tax payments.

Which accounts are subject to RMDs?

The required minimum distribution rules generally apply to traditional IRAs, SEP IRAs, SIMPLE IRAs, 401(k)s, 403(b)s, 457(b) plans, profit-sharing plans, and other pre-tax defined contribution accounts. Roth IRAs do not require lifetime RMDs for the original owner. Designated Roth accounts in workplace plans are also generally exempt from lifetime RMDs under current rules, though beneficiaries may still have required distribution obligations.

The “still working” exception is another common source of confusion. A client who continues working after RMD age may be able to delay RMDs from the current employer’s qualified plan if the plan permits it and the client is not a more-than-5% owner. That exception does not usually apply to IRAs or old employer plans. Advisors should verify the plan document rather than assuming the IRS default is the plan’s actual administrative rule.

How the RMD calculation works

The general RMD formula is:

RMD = prior year-end account balance ÷ IRS distribution period.

The account balance is usually the December 31 value from the prior calendar year. The distribution period comes from the appropriate IRS life expectancy table, most often the Uniform Lifetime Table for account owners. Different tables can apply when a spouse is more than 10 years younger and is the sole beneficiary, or when a beneficiary is calculating inherited-account distributions.

The formula is straightforward. The workflow is not. Advisors often need to confirm which accounts are included, whether prior-year values are accurate, whether a late rollover or transfer affected reporting, whether an inherited account has separate rules, and whether the client already took partial distributions that can be credited toward the annual requirement.

Aggregation rules can trip up clients

Clients frequently ask whether they can take the total RMD from one account. The answer depends on account type. IRA RMDs are generally calculated separately but may often be aggregated and withdrawn from one or more IRAs. Certain 403(b) RMDs may have similar aggregation treatment. Workplace retirement plans such as 401(k)s typically require the RMD to be taken from each plan separately.

This is where advisor operations need a household-level view. A client with three traditional IRAs, an old 401(k), a current employer plan, and an inherited IRA may need different calculations and distribution instructions for each account category. The risk is not just a tax penalty; it is incomplete advice, missed documentation, and avoidable client anxiety.

Penalties for missed or short RMDs

If a client misses an RMD or withdraws less than required, the excise tax can be 25% of the amount not withdrawn. That penalty may be reduced to 10% if corrected in the required timeframe. Even though the penalty is lower than the old 50% regime, it is still material and avoidable.

Advisors should maintain a repeatable exception process for late-year reviews: identify clients over the applicable age, compare required and completed distributions, verify custodian instructions, and document client decisions. A December 31 deadline is not an ideal time to discover that a client changed custodians, forgot an inherited IRA, or assumed withholding covered the distribution itself.

Tax planning around RMDs

RMDs are generally taxed as ordinary income unless part of the distribution represents basis or a qualified tax-free amount. The tax impact can extend beyond the withdrawal itself. Larger distributions can increase taxable Social Security benefits, push a client into higher Medicare premiums, affect estimated tax obligations, or reduce flexibility for Roth conversions and capital gain realization.

Planning should begin years before RMDs start. Roth conversions, charitable giving, asset location, withdrawal sequencing, and bracket management can all change the shape of future RMDs. Once RMDs begin, qualified charitable distributions can be especially relevant for charitably inclined clients age 70½ and older because QCDs can satisfy part or all of an IRA RMD while excluding the donated amount from taxable income, subject to IRS limits and eligibility rules.

Advisor workflow checklist for 2026

A practical RMD workflow should include five controls:

1. Confirm the client’s applicable RMD age and first-deadline year.
2. Inventory all retirement accounts, including inherited accounts and old employer plans.
3. Validate prior December 31 balances and applicable IRS distribution tables.
4. Coordinate tax withholding, cash needs, charitable giving, and portfolio trades before distribution instructions are sent.
5. Record the calculation, client authorization, completed distribution, and any exception or correction steps.

The final control matters. RMD work is a regulated advice-adjacent workflow with tax, investment, and operational implications. Notes should show what was reviewed, what assumptions were used, what the client decided, and what was completed.

Where AI can help advisor teams

RMD management is a strong example of advisor operations that benefits from structured automation. Verlo can help advisor teams collect client context, summarize planning conversations, draft follow-up notes, track open items, and maintain an auditable record of assumptions and next steps. The advisor remains responsible for advice, review, and client communication, but the administrative load becomes more consistent and less dependent on memory.

For example, after an RMD planning call, an AI workflow can produce a meeting summary, extract action items for the service team, flag missing account data, draft a client recap, and preserve the reasoning behind distribution timing. That gives the firm a clearer record and gives clients faster follow-through.

Required minimum distribution rules will continue to evolve, and every client situation has details that deserve review. The best advisory firms treat RMDs not as an annual transaction, but as a coordinated retirement-income, tax, and service workflow.

See how Verlo helps advisor teams reduce manual admin work: https://verlo.finance/lp-demo