For pre-retirees and retirees across Allentown, Bethlehem, and Easton, required minimum distributions, RMDs for short, are one of the more mechanical but consequential parts of a retirement income plan. Once you reach a certain age, the IRS requires you to start withdrawing a minimum amount from most tax-deferred retirement accounts each year, whether you need the cash flow or not. The SECURE Act 2.0 changed the RMD age rules significantly in recent years, and many Lehigh Valley pre-retirees are still working out how the new timeline applies to their own birth year. This article walks through the current rmd rules in general terms so you have context before working through your own numbers with a tax or financial professional.
What Is an RMD and Why It Matters
A required minimum distribution is the smallest amount the IRS requires you to withdraw each year from certain retirement accounts once you reach your applicable age. RMDs generally apply to traditional IRAs, SEP and SIMPLE IRAs, and most employer-sponsored plans such as 401(k)s and 403(b)s. The rule exists because these accounts were funded with pre-tax dollars that have grown tax-deferred for years or decades. The IRS designed RMDs to eventually bring that money into taxable income, rather than allowing it to grow tax-deferred indefinitely.
Roth IRAs are a notable exception: they are not subject to RMDs during the original owner's lifetime, since Roth contributions are already taxed and the account is not treated the same way under the tax code. Designated Roth accounts inside 401(k) plans were also brought into line with this treatment in recent years. Inherited accounts, whether traditional or Roth, follow a different and more complex set of distribution rules that are not covered in this article.
Current RMD Age Rules (SECURE Act 2.0 Changes)
The SECURE Act 2.0, signed into law in December 2022, raised the RMD withdrawal age in stages. As of 2026, the current framework works like this:
| Birth Year | RMD Age | | --- | --- | | 1950 or earlier | 72 (under prior law) | | 1951 to 1959 | 73 | | 1960 or later | 75 |
The age-75 threshold phases in fully by 2033, so the practical effect for 2026 is that most people currently reaching their RMD age are using the age-73 rule. If you were born in 1960 or later, your applicable age is 75, though the earliest that group actually reaches age 75 is several years out.
Timing matters as much as the age itself. Your very first RMD can be delayed until April 1 of the year after you reach your applicable age, a date the IRS calls your "required beginning date." Every RMD after that first one must be taken by December 31 of each year. Delaying the first RMD into the following April can mean taking two RMDs in the same calendar year, which is worth thinking through before you decide to wait (more on that below).
These are general federal rules under current IRS guidance, and the specific date that applies to you depends on your exact birth date and account types. This article is not personalized tax advice, and confirming your own required beginning date with a tax professional is a reasonable step before your first RMD year.
How to Calculate Your RMD
Most people calculate their RMD using the IRS Uniform Lifetime Table, found in IRS Publication 590-B. The basic formula is:
Account balance as of December 31 of the prior year, divided by the life expectancy factor for your age from the applicable IRS table.
As a simple, hypothetical illustration: suppose a 75-year-old retiree had a traditional IRA balance of $500,000 on December 31 of the prior year, and the Uniform Lifetime Table factor for age 75 were 24.6. Dividing $500,000 by 24.6 produces an RMD of approximately $20,325 for that year. This example is illustrative only. Your own factor and balance will differ, and the table itself is periodically updated by the IRS.
Not everyone uses the Uniform Lifetime Table. A Joint Life and Last Survivor Table applies in certain cases where a spouse is more than 10 years younger and is the sole beneficiary, and a Single Life Table applies to certain beneficiaries of inherited accounts. Which table applies to your situation depends on your account type, marital status, and beneficiary designations, so this is another area where reviewing IRS Publication 590-B or speaking with a tax professional can help confirm you are using the correct factor.
Penalties for Missed Distributions
Missing an RMD, or withdrawing less than the required amount, triggers an excise tax on the shortfall. Historically, that penalty stood at a steep 50 percent of the amount that should have been withdrawn. The SECURE Act 2.0 reduced the base penalty to 25 percent, and it can drop further to 10 percent if the shortfall is corrected within the IRS's correction window.
If you discover a missed or shortfall RMD, the general process involves filing IRS Form 5329, taking the missed distribution as soon as reasonably possible, and, in appropriate cases, requesting a waiver of the penalty for reasonable cause. The IRS reviews waiver requests case by case, and there is no guarantee a waiver will be granted. Because the correction window, the waiver process, and the interaction with your other income for the year can each affect the outcome, working with a tax professional on a missed RMD is generally a wise step rather than an optional one.
Strategies to Optimize RMDs
A few approaches may help pre-retirees and retirees manage the tax impact of RMDs, though none of these guarantee a particular result and all depend on individual circumstances.
Qualified Charitable Distributions (QCDs). Once you reach age 70½, you may be able to direct funds from your IRA to charity through a QCD. For 2026, the annual QCD limit is $111,000 per individual, up from $108,000 in 2025, since the limit is indexed for inflation and may change again in future years. A QCD sent directly from the IRA to a qualifying charity can count toward satisfying your RMD without adding to your taxable income. This can be a meaningful benefit for charitably inclined retirees, though it only reduces taxable income to the extent the distribution goes directly to charity rather than to you, and it is not available before age 70½.
Roth Conversions. Converting traditional IRA or 401(k) funds to a Roth IRA before you reach RMD age can reduce the size of future RMDs, since Roth IRAs carry no RMDs during the original owner's lifetime. The tradeoff is that the converted amount is generally taxable as ordinary income in the year of the conversion, which can be substantial depending on the amount converted and your other income that year. Whether a Roth conversion makes sense, and how large a conversion to consider, depends heavily on your individual tax bracket, time horizon, and overall financial picture, and results vary from household to household.
Timing Considerations. As noted above, your first RMD can be delayed to April 1 of the year after you reach your applicable age. That flexibility can be useful, but if you delay, you may end up taking two RMDs in the same calendar year, which could push more income into a higher tax bracket than taking them in separate years. Coordinating the timing of your first RMD with your other income sources is generally easier to work through with an advisor who can look at your full tax picture before you decide.
How a Local Fiduciary Advisor Can Help
RMD rules intersect with tax brackets, Medicare premiums, Social Security taxation, and charitable goals all at once, which is why they rarely have a one-size-fits-all answer. As a fee-only fiduciary advisor based in the Lehigh Valley, Wealthcare of the Lehigh Valley works with pre-retirees and retirees to project upcoming RMDs, evaluate whether strategies like QCDs or Roth conversions may fit their situation, and coordinate distribution timing with the rest of their retirement income plan. Because we are compensated only by our clients and do not earn commissions on products, our recommendations are built around your full financial picture rather than any single strategy being presented as the right answer for everyone.
We work closely with the pre-retirees, retirees, medical professionals, and higher-education faculty and administrators we serve across Allentown, Bethlehem, Easton, and the broader Lehigh Valley to build retirement income and distribution strategies around each household's account mix, tax situation, and goals.
If you are approaching your own RMD age, or want a second look at how your distributions fit into your broader plan, we would welcome the conversation. You can schedule a consultation with our team to get started.
Written by Ayad Amary, CFP®, AIF®
Frequently Asked Questions
What is the current RMD age?
Under the SECURE Act 2.0, the required beginning age is 73 for people born from 1951 through 1959. For those born in 1960 or later, the applicable age rises to 75, a change that phases in fully by 2033. The specific date your first RMD is due depends on your birth year and the calendar year you reach your applicable age.
What happens if I miss my RMD?
The SECURE Act 2.0 reduced the excise tax on a missed RMD from 50 percent of the shortfall to 25 percent, and the rate can drop further to 10 percent if the shortfall is corrected within the IRS's correction window. Missed distributions are generally reported on Form 5329, and the IRS may waive the tax for reasonable cause. Because the rules and correction steps are detailed, this is a good area to review with a tax professional.
Can I avoid RMDs with a Roth IRA?
Roth IRAs are not subject to RMDs during the original owner's lifetime, which is one reason some retirees consider Roth conversions before their RMD age. Converting traditional retirement funds to a Roth generally triggers taxable income in the year of conversion, so whether it makes sense depends on your individual tax situation and time horizon.
How are RMDs taxed?
Distributions from traditional IRAs, 401(k)s, and similar pre-tax accounts are generally taxed as ordinary income in the year they are withdrawn, whether taken as an RMD or otherwise. Qualified charitable distributions sent directly to charity are a notable exception, since the amount can be excluded from taxable income up to the annual QCD limit. A tax professional can help you understand how a given year's RMD affects your specific return.
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