Retirement savings vehicles such as traditional individual retirement accounts (IRAs) and 401(k) plans offer individuals the advantage of lowering current taxable income through investments made with pre-tax dollars. However, the tax benefit is deferred rather than eliminated; account owners are required to pay federal income tax on both their original contributions and any profits generated when distributions are made during retirement.
Significantly, distributions cannot be postponed indefinitely. These tax-deferred accounts fall under required minimum distribution (RMD) regulations, which mandate that account holders begin withdrawing a minimum amount from their retirement savings annually once they reach a legislated age threshold.
Complexity around RMDs has increased recently due to alterations introduced by the Secure 2.0 Act of 2022. An overview of three critical rule changes that take effect in 2026 is detailed below to help retirees understand their obligations and plan accordingly.
1. RMD Commencement Age Adjusted to 73 for Those Born Between 1951 and 1959
The age at which retirees are first required to start withdrawing minimum amounts from tax-deferred accounts depends upon their birth year. Originally, the Secure 1.0 Act (enacted in 2019) shifted this starting age from 70 1/2 to 72 for individuals born on or after July 1, 1949. Subsequently, the Secure 2.0 Act (2022) raised the age at which RMDs must commence to 73, applicable for persons born on or after January 1, 1951.
This establishes the following mandatory withdrawal ages based on birth date:
| Birth Date Range | RMD Starting Age |
|---|---|
| Before July 1, 1949 | 70 1/2 |
| July 1, 1949 - December 31, 1950 | 72 |
| January 1, 1951 - December 31, 1959 | 73 |
| After December 31, 1959 | 75 |
These RMD regulations apply to traditional 401(k)s and IRAs, including SEP IRAs and SIMPLE IRAs. Critically, reaching the relevant age triggers the requirement to take withdrawals even if the account holder remains employed.
RMDs generally must be withdrawn by December 31 annually, though the initial distribution can be delayed until April 1 of the year following the one in which the account holder attains the required age. For example, an individual named Ben who turns 73 in 2026 must begin taking distributions that year but can defer his first withdrawal until April 1, 2027. However, his second withdrawal is then due by December 31, 2027, and all subsequent RMDs must be withdrawn by December 31 of each respective year.
2. Roth 401(k) and Roth 403(b) Accounts No Longer Subject to RMDs for Original Holders
The Secure 2.0 Act also removed the requirement for original account owners of Roth 401(k) and Roth 403(b) plans to take required minimum distributions. Prior to this legislation, a discrepancy existed whereby traditional Roth IRAs were exempt from RMDs, but Roth accounts within employer-sponsored plans such as Roth 401(k)s and Roth 403(b)s mandated annual minimum withdrawals once reaching a certain age.
Under the updated rules, dedicated Roth accounts owned by the original account holder are free from RMD obligations during their lifetime. However, this exemption does not extend to inherited Roth IRAs or inherited Roth 401(k) accounts; beneficiaries inheriting these accounts remain subject to RMD rules.
3. Penalties for Missing RMD Deadlines and Calculation Methods
RMD amounts are calculated using the account balance as of December 31 from the previous year divided by a life expectancy factor specified in one of three IRS-published tables:
- Table III — Uniform Lifetime Table, generally utilized by account owners to compute their withdrawals
- Table I — Single Life Expectancy Table, typically employed by beneficiaries
- Table II — Joint and Last Survivor Life Expectancy Table, used when the account owner’s spouse is the sole beneficiary and is more than 10 years younger
Returning to the earlier hypothetical, Ben will determine his 2026 RMD by dividing his account balance as of December 31, 2025, by the applicable factor derived from the IRS tables based on his circumstances.
Previously, failure to fulfill RMD requirements by the deadline incurred a steep excise tax penalty amounting to 50% of the distribution that was omitted. The Secure 2.0 Act has since reduced this penalty to 25%, with a further reduction to 10% possible if the account owner corrects the missed withdrawal within two years. Compliance also necessitates filing IRS Form 5329 with one’s tax return to report any shortfalls in taking required distributions.
Summary of Practical Guidance for Retirees
In essence, retirees need to be aware of these three important changes: the age to begin RMDs has increased depending on birth year; Roth 401(k) and Roth 403(b) holders no longer face RMDs during their lifetime under the new regulations; and penalties for missing RMD deadlines have been lowered but still carry significant consequences. Adequate planning and timely action remain essential to avoid unexpected tax burdens and ensure compliance with federal rules governing retirement savings distributions.