By Phillip Scavo, CFP®, MBA
Manager of Wealth Planning | April 2026
Required Minimum Distributions (RMDs) are the minimum amounts the IRS requires you to withdraw each year from retirement accounts such as IRAs, 401(k)s, or similar plans once you reach a certain age. Understanding RMDs helps you plan for taxes, avoid penalties, support retirement income, and manage estate planning.
This guide explains RMD basics, calculations, inherited IRA rules, the five-year and ten-year distribution rules, and pre-SECURE Act provisions. Because these rules change frequently, consult your advisor, a tax professional, or IRS guidance before making distributions.
For your own retirement accounts, RMDs currently begin at age 73 (in 2026 for individuals born in 1953).
For inherited IRAs, requirements depend on who inherits the account, when it is inherited, and whether the original owner had already begun taking RMDs.
Roth IRAs are not subject to RMDs during the original owner's lifetime.
RMDs are generally taxed as ordinary income for federal tax purposes, although state taxation varies. Planning withdrawals carefully can help improve tax efficiency.
RMDs are calculated by dividing the account balance as of December 31 of the previous year by a life expectancy factor from IRS tables. These factors vary depending on age and beneficiary status. See IRS Publication 590-B for details.
Use Table III (Uniform Lifetime Table) if your spouse is not the sole beneficiary or is not more than 10 years younger than you.
If your spouse is more than 10 years younger, Table II (Joint and Last Survivor Expectancy) may apply. This table provides a longer life expectancy factor and results in smaller required withdrawals.
For example, a $100,000 IRA balance divided by the applicable life expectancy factor determines the annual RMD.
RMDs must generally be taken by December 31 each year. Your first RMD may be delayed until April 1 of the year after you turn 73, but doing so requires taking two withdrawals in that same calendar year.
Non-spousal beneficiaries typically use Table I (Single Life Expectancy) based on their age at inheritance.
Spousal beneficiaries may treat the IRA as their own and use Table III, allowing them to delay RMDs until age 73.
Because calculations vary depending on beneficiary type and age, consult IRS tables with your advisor or tax professional.
Inherited IRA rules depend on the type of beneficiary.
Spouses generally have the most flexibility. They may:
Two categories apply.
This group includes:
These beneficiaries may take distributions based on their life expectancy.
If you do not qualify as an eligible designated beneficiary and the account holder died after 2019, the entire IRA must generally be distributed within ten years.
If the original owner had already reached RMD age, annual RMDs must also be taken during the ten-year period.
These include estates, charities, or organizations.
Who it applies to: Typically applies to non-individual beneficiaries, such as estates, trusts, or charities, when the IRA owner died before reaching RMD age and the beneficiary does not qualify for lifetime withdrawals. This rule is rarely used for individuals after the SECURE Act.
Details: The IRA must be fully distributed by December 31 of the fifth year after the owner's death. No annual RMDs are required.
Example: If you inherit $50,000 in 2026, the account must be fully withdrawn by 2031.
Who it applies to: Most non-spousal designated beneficiaries inheriting IRAs after December 31, 2019 fall under the ten-year rule unless they qualify as eligible designated beneficiaries.
Details: The IRA must be fully distributed by December 31 of the tenth year following the owner's death. If the decedent had already reached age 73, non-eligible designated beneficiaries must also take annual RMDs during the ten-year period.
Example: A 50-year-old inheriting a $100,000 IRA in 2026 would take annual RMDs while ensuring the account is fully distributed by 2036.
Eligible designated beneficiaries may instead take lifetime RMDs.
Who it applies to: If the IRA owner died at or after age 73, beneficiaries must generally continue annual RMDs based on either:
Example: A trust inheriting a $100,000 IRA from a 75-year-old would take RMDs based on the decedent's remaining life expectancy.
If the five-year rule is elected, the account must be emptied within five years without annual RMDs.
Who it applies to: Spouses may:
Example: A 60-year-old spouse inheriting a $100,000 IRA could delay RMDs until age 73.
Who it applies to: Before the SECURE Act, non-spousal beneficiaries could stretch RMDs over their lifetime using Table I, allowing smaller annual withdrawals and extended tax deferral.
Example: A 50-year-old inheriting $100,000 in 2015 could spread withdrawals over decades.
This option ended for most beneficiaries for deaths occurring after December 31, 2019, except for spouses and eligible designated beneficiaries.
Missing an RMD triggers a 25% penalty on the amount not withdrawn, which may be reduced to 10% if corrected within two years.
Example: Missing a $4,000 RMD could result in a $1,000 penalty, or $400 if corrected promptly.
You may request a waiver for reasonable errors by filing IRS Form 5329.
Timing: Delaying your first RMD until April 1 means taking two distributions in the same year, which may increase taxable income.
Taxes: RMDs increase taxable income and may move you into a higher tax bracket.
If you are age 70½ or older and charitably inclined, consider a Qualified Charitable Distribution (QCD). You may donate up to $111,000 in 2026 directly from your IRA to a qualified charity. The distribution counts toward your RMD but is excluded from taxable income.
Income Planning: Even if you can wait until the tenth year to distribute an inherited IRA, you may choose to take withdrawals earlier to manage taxes.
Example: withdrawing $5,000 annually from a $50,000 inherited IRA may help smooth income over time.
Inheritance Planning: Spouses have flexible options, while other beneficiaries face stricter rules. Discuss plans with heirs, tax professionals, and your advisor.
Penalties: Setting reminders or working with an advisor can help ensure RMD deadlines are met and avoid penalties.
RMD rules can be complex. Calculating distributions correctly is essential to avoid penalties and unnecessary taxes.
Parallel Advisors helps ensure your RMDs are accurate and timely based on the appropriate IRS life expectancy tables. Whether you are managing multiple retirement accounts or navigating an inherited IRA, we provide guidance to help keep your financial plan on track while complying with IRS requirements.
This material is provided for informational purposes only and should not be construed as investment advice. Different types of investments involve varying degrees of risk. Discussion or information contained in this presentation does not constitute personalized investment advice from Parallel or another professional advisor of your choosing. Any opinions or forecasts contained herein reflect the subjective judgments and assumptions of Parallel Advisors, LLC ("Parallel"). Parallel cannot and does not provide warranties nor representations as to the reliability or accuracy of the content it shares.