If you’ve been diligently saving in a traditional IRA or 401(k) throughout your working years, retirement brings a welcome reward — but also a responsibility that catches many people off guard. Required minimum distributions are the IRS’s way of ensuring that tax-deferred retirement savings eventually get taxed, and understanding how they work can make a meaningful difference in your retirement income strategy. For retirees and pre-retirees here on Florida’s Treasure Coast, where the sunshine is predictable but tax bills can be surprising, getting a firm grip on required minimum distributions is one of the most practical things you can do to protect your financial wellness. Whether you’re approaching 73 or already navigating annual withdrawals, this guide will walk you through everything you need to know in plain, friendly language.
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For a deeper dive, you can also explore the Required Minimum Distributions explained — Complete Guide available on our site. It pairs nicely with the episodes we cover on the podcast and gives you a comprehensive reference you can return to throughout the year.
What Are Required Minimum Distributions?
Required minimum distributions are mandatory annual withdrawals that the IRS requires you to take from most tax-deferred retirement accounts once you reach a certain age. The logic behind them is straightforward: when you contributed money to a traditional IRA, 401(k), 403(b), or similar account, you received a tax deduction on those contributions, meaning the IRS has never collected taxes on that money. Uncle Sam has been patient, but he eventually wants his share. Required minimum distributions are the mechanism that forces those funds — and their accumulated growth — into your taxable income so they can finally be taxed.
The accounts subject to required minimum distributions include traditional IRAs, SEP IRAs, SIMPLE IRAs, 401(k) plans, 403(b) plans, 457(b) governmental plans, and most other employer-sponsored retirement plans. One notable exception is the Roth IRA — because Roth contributions are made with after-tax dollars, the IRS does not require you to take distributions from your own Roth IRA during your lifetime. However, inherited Roth IRAs do follow their own set of distribution rules, which we’ll touch on below. Understanding exactly which of your accounts are subject to these rules is an important first step in building a smart withdrawal strategy.
When Do Required Minimum Distributions Begin?
The SECURE 2.0 Act, signed into law at the end of 2022, made a significant change to when required minimum distributions must begin. Prior to this legislation, the starting age was 72. SECURE 2.0 pushed that age to 73 for anyone who turns 72 after December 31, 2022, and it’s currently scheduled to increase again to age 75 for those born in 1960 or later. This is genuinely good news for pre-retirees, because it gives your accounts more time to potentially grow before you’re required to start pulling money out. If you’re currently in your late 60s or early 70s here on the Treasure Coast and not yet required to take distributions, this extended window could be a valuable planning opportunity.
Your first required minimum distribution must be taken by April 1st of the year following the year you turn 73. Every subsequent required minimum distribution must be taken by December 31st of that calendar year. This means if you delay your very first RMD until April 1st, you’ll actually be taking two required minimum distributions in the same calendar year — which could push you into a higher tax bracket and potentially affect your Medicare premiums. For this reason, many retirees choose to take their first distribution during the actual year they turn 73 rather than waiting for the April 1st deadline. The IRS provides detailed FAQs on RMD rules that can help you confirm the exact deadlines that apply to your situation.
If you’re still working past age 73 and participating in your current employer’s 401(k), there’s a helpful exception worth knowing about. Many employer plans allow you to delay required minimum distributions from that specific plan until you actually retire, as long as you don’t own more than 5% of the company. This exception does not apply to IRAs or to 401(k) accounts from previous employers, so it’s worth reviewing each of your accounts individually to understand which rules apply where.
How to Calculate Your Annual RMD
The calculation for required minimum distributions isn’t particularly complicated once you understand the formula, but it does require attention to detail. The basic equation divides the account’s balance on December 31st of the prior year by a “life expectancy factor” published in IRS Uniform Lifetime Tables. The IRS updated these tables in 2022 to reflect longer life expectancies, which slightly reduced the percentage retirees are required to withdraw each year. You can find the current tables in IRS Publication 590-B, which is updated regularly and freely available online.
As a practical example, suppose your traditional IRA had a balance of $500,000 on December 31st of last year and your age puts your life expectancy factor at 26.5. Dividing $500,000 by 26.5 gives you a required minimum distribution of approximately $18,868 for the current year. That amount must be included in your gross income and taxed at your ordinary income tax rate. If you have multiple IRAs, you can calculate the required minimum distribution for each account separately and then take the total amount from one or more of your IRAs — you’re not required to withdraw proportionally from each account. However, 401(k) accounts are treated differently: the RMD for each 401(k) must be satisfied separately from that specific plan.
Many financial institutions and custodians offer online RMD calculators to help you estimate your annual withdrawal. While these tools are helpful for planning purposes, it’s always wise to verify the numbers with a qualified financial professional, especially if your situation involves multiple accounts, a surviving spouse, or inherited retirement assets. Getting the calculation right matters because under-withdrawing triggers a steep penalty — historically 50%, though SECURE 2.0 reduced this to 25% (and potentially 10% if corrected promptly). These are penalties you absolutely want to avoid, and the good news is that with a little organization, they’re entirely preventable.
Understanding the Tax Impact of RMDs
One of the most important things to understand about required minimum distributions is that they are treated as ordinary income, taxed at the same rates as wages or Social Security benefits. For many retirees, this creates a layered tax situation that requires careful coordination. Florida is a genuinely wonderful state for retirees in one specific respect: it has no state income tax, so Treasure Coast residents get to keep the full state-tax benefit of their distributions. But federal taxes still apply, and the amount you’re required to withdraw each year can interact with other parts of your financial picture in ways that aren’t immediately obvious.
One interaction worth understanding involves Social Security. Up to 85% of your Social Security benefits may be subject to federal income tax depending on your combined income, which includes half of your Social Security benefits plus all other income — including required minimum distributions. As your RMDs grow over time (which they often do as account balances grow), they can inadvertently push more of your Social Security into the taxable range. Similarly, Medicare Part B and Part D premiums are determined by your Modified Adjusted Gross Income from two years prior, through a system called IRMAA (Income-Related Monthly Adjustment Amount). A larger-than-expected required minimum distribution in one year can result in higher Medicare premiums two years later. For more details on how income affects Medicare costs, the official Medicare.gov cost information page is an excellent resource.
Required minimum distributions can also affect your eligibility for certain deductions, credits, and tax thresholds. This is precisely why proactive tax planning — ideally starting several years before you turn 73 — is so valuable. By understanding the tax landscape in advance, you and your financial team can make informed decisions about Roth conversions, charitable giving strategies, and withdrawal sequencing that may reduce your overall tax burden in retirement.
Smart Strategies to Manage Your RMDs
The good news is that required minimum distributions aren’t just something to endure — they’re a planning opportunity. One of the most popular strategies for charitably-minded retirees is the Qualified Charitable Distribution, or QCD. If you’re 70½ or older, you can direct up to $105,000 per year (as of 2026, indexed for inflation) directly from your IRA to a qualified charity. This transfer counts toward satisfying your required minimum distribution for the year, but the amount is excluded from your taxable income entirely. For retirees here on the Treasure Coast who donate regularly to local organizations, churches, or community causes, a QCD can be one of the most tax-efficient giving strategies available. The key is that the distribution must go directly from the IRA custodian to the charity — you cannot take the money yourself and then donate it.
Another strategy worth considering is a Roth conversion, ideally executed in the years between retirement and the age when required minimum distributions begin. If you retire at 65 and don’t have to start taking RMDs until 73, you have up to eight years where your taxable income may be relatively low. Using that window to convert portions of your traditional IRA to a Roth IRA — paying taxes now at a potentially lower rate — can reduce the size of the accounts subject to required minimum distributions later. It can also leave more of your wealth in a tax-free vehicle for your heirs. This strategy requires careful modeling, because Roth conversions also increase your income and can trigger the same Social Security and Medicare considerations mentioned earlier.
Some retirees also choose to invest their required minimum distributions rather than spend them, particularly if they don’t need the full withdrawal amount for living expenses. While you can’t return the money to a tax-deferred account, you can place it in a taxable brokerage account where it may continue to grow. This approach can be part of a broader wealth transfer strategy, and it underscores an important mindset shift: RMDs don’t have to represent the end of your investment journey, just a different chapter. The team at The 1715 Podcast and financial community regularly discusses these kinds of strategies in a way that’s accessible and practical for everyday retirees.
Common Mistakes to Avoid with Required Minimum Distributions
Even well-organized retirees sometimes run into trouble with required minimum distributions simply because the rules have layers and have changed multiple times in recent years. One of the most common mistakes is forgetting to take the distribution at all. Life gets busy, the year-end deadline sneaks up, and suddenly it’s January 2nd and you’ve missed your window. The penalty for failing to take a required minimum distribution — now 25% of the amount not withdrawn — is steep enough to cause real financial harm, and it’s entirely avoidable with a simple calendar reminder or an automatic distribution arrangement with your custodian.
Another frequent misstep involves inherited IRAs. The rules around required minimum distributions for inherited accounts changed significantly under the SECURE Act and SECURE 2.0, and many beneficiaries are still navigating the new landscape. Under current rules, most non-spouse beneficiaries who inherited an IRA after January 1, 2020 are subject to a 10-year rule, meaning the account must be fully distributed within 10 years of the original owner’s death. This replaced the old “stretch IRA” strategy that allowed beneficiaries to take distributions over their own lifetimes. Additionally, if the original account owner had already begun taking required minimum distributions before passing, beneficiaries may also need to take annual distributions during those 10 years — not just drain the account by year 10. The IRS has issued guidance on this, but it remains a complex area where professional advice is especially valuable.
A third mistake is treating all accounts the same. As we discussed earlier, the rules for IRAs and 401(k)s differ, and the rules for inherited accounts differ again. Retirees with multiple account types often benefit from creating a simple inventory that lists each account, its current balance, its type, and the applicable required minimum distribution rules. This kind of organized approach reduces the chance of errors and makes it much easier for you and your advisors to plan effectively each year.
Next Steps for Treasure Coast Retirees
If you’re within five years of turning 73, now is an excellent time to sit down with a financial professional and map out your projected required minimum distributions year by year. Understanding what your withdrawals might look like — and how they’ll interact with Social Security, Medicare, and your overall tax situation — gives you the runway to make strategic decisions before the rules require your hand. Even small adjustments made early, like targeted Roth conversions or charitable giving through QCDs, can add up to meaningful savings over a 20- or 30-year retirement.
If you’re already taking required minimum distributions, it’s worth revisiting your strategy annually. Tax laws change, life circumstances shift, and account balances fluctuate — all of which affect the optimal approach. An annual review of your withdrawal strategy, ideally in the third or fourth quarter when you have a clear picture of that year’s income, can help you make last-minute adjustments like charitable distributions or additional conversions before the December 31st deadline. Many retirees find it helpful to coordinate these conversations with both their financial advisor and their tax preparer so everyone is working from the same set of numbers.
The 1715 Podcast exists to make conversations like this one less intimidating and more actionable. We know that for many Stuart and Treasure Coast retirees, the financial landscape can feel complicated — but it doesn’t have to feel overwhelming. Required minimum distributions are simply a rules-based system, and once you understand the rules, you can work within them thoughtfully and confidently. If you found this guide helpful, we’d love for you to tune in to the podcast for more conversations like this one, or reach out to schedule a no-pressure educational consultation to review your own situation.
This content is for educational purposes only and does not constitute investment advice. Past performance is not indicative of future results. Please consult a qualified financial professional before making any financial decisions.
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