RMDs Explained: New Ages, Penalties, and Rules Under SECURE 2.0

RMDs are the government's way of eventually collecting tax on money that's been growing tax-deferred for decades. You don't get to leave it in a Traditional 401(k) or IRA forever — past a certain age, you're required to start pulling a minimum amount out each year, whether you need the cash or not. SECURE 2.0 changed several of the specifics here, and a few of the changes are easy to miss if you're not paying close attention.

The age: 73 now, 75 later

Birth year	RMD age
Before July 1, 1949	70½ (already applicable)
July 1, 1949 – 1950	72 (already applicable)
1951–1959	73 (see the 1959 note below)
1960 or later	75 (first RMDs for this group are due for 2035)

If you're not already taking RMDs, odds are your starting age is 73. The age-75 rule applies to people born in 1960 or later, so nobody actually reaches 75 under it until 2035, and it mostly affects people who aren't close to this yet. One caveat for 1959 births: the law is worded ambiguously for that year, and the IRS's July 2024 proposed regulations say the age is 73. We couldn't confirm those regulations have been finalized, so if you were born in 1959, check with the IRS or a tax professional. Also, if you're still working past your RMD age, you can generally delay RMDs from your current employer's plan until you retire, unless you own 5% or more of the company.

The first-year trap

You get some flexibility on your very first RMD — it can be delayed until April 1 of the year after you turn the RMD age, rather than by December 31 of that year. That flexibility has a cost, though: delay it, and you still owe your second RMD by that same year's December 31. Two RMDs' worth of taxable income then land in one calendar year, which can push you into a higher bracket than either withdrawal would on its own. Taking the first one on time, in the actual year you turn the RMD age, usually avoids that squeeze.

How the amount is calculated

Your RMD isn't a flat percentage — it's your account balance from December 31 of the prior year, divided by a life expectancy factor from the IRS's Uniform Lifetime Table (a different table applies if your spouse is your sole beneficiary and more than 10 years younger). As the factor shrinks with age, the required percentage of your balance creeps up each year. Each account with an RMD requirement generally needs this calculated separately, though 401(k)s and IRAs have different rules about whether you can total everything and withdraw from just one account to satisfy it.

The penalty got a lot less brutal

The penalty for missing an RMD used to be a jaw-dropping 50% of the shortfall. SECURE 2.0 cut that to 25%, and down to 10% if you correct the mistake in a timely way (the IRS generally says within two years) — still not a fun mistake to make, but a different world from where the penalty used to sit. If you do miss one, filing IRS Form 5329 with a reasonable-cause explanation can sometimes get the penalty waived entirely if the shortfall was a reasonable error and you're taking reasonable steps to fix it.

Which accounts are actually subject to this

• Subject to RMDs: Traditional 401(k), Traditional IRA, SEP IRA, SIMPLE IRA (and other employer plans such as 403(b)s and 457(b)s).
• Not subject, during the original owner's lifetime: Roth IRA (always exempt) and, as of 2024, Roth 401(k) — a real shift from how it used to work, since Roth 401(k)s used to carry RMDs while Roth IRAs never did.

If you've been rolling a Roth 401(k) into a Roth IRA specifically to dodge its old RMD requirement, that workaround isn't necessary anymore — though there can still be other good reasons to consolidate accounts.

Why this matters for the order you withdraw in

RMDs are a big part of why withdrawal sequencing matters so much. Once they kick in, they force taxable income out of your tax-deferred accounts on the IRS's schedule, not yours. Some retirees respond by drawing down tax-deferred balances earlier and more aggressively than "required," specifically to shrink future RMDs before they become mandatory and less flexible.

Two other bills that show up later, not right away

A large RMD doesn't stop at pushing you into a higher bracket. It can quietly raise two other costs at the same time, and I don't think either gets talked about enough:

• More of your Social Security becomes taxable. Up to 85% of your Social Security benefit can be federally taxable, depending on "combined income" (your other income, plus tax-exempt interest, plus half your Social Security benefit). The thresholds that decide this — $25,000/$34,000 for single filers, $32,000/$44,000 for joint filers — haven't been adjusted for inflation since the 1980s and '90s, so a growing share of retirees cross into taxable territory every year even without any change in their own habits. An RMD landing on top of Social Security is a common way to cross that line.
• Medicare premiums can jump — a lot. This is IRMAA (Income-Related Monthly Adjustment Amount), a surcharge on Medicare Part B and Part D based on income from two years earlier. It's a cliff, not a slope: one dollar over a threshold triggers the full surcharge for that entire tier. A large RMD (or a big Roth conversion, for that matter) two years ago can mean paying roughly $95 to $500 or more extra per month, depending on the tier, for the exact same Medicare coverage.

Neither shows up the year the RMD happens. The Social Security effect lands on that year's tax return; the IRMAA effect doesn't show up until a premium notice two years later. Here's roughly how it plays out for one retiree.

Say a single retiree has a $50,000 pension and a $24,000 Social Security benefit. Without an RMD, their combined income for Social Security purposes ($50,000 plus half of $24,000) already sits well above the 85% threshold, so $20,400 of their benefit is taxable — their Modified Adjusted Gross Income (MAGI) lands around $70,400, nowhere near the IRMAA cliff. Add a $40,000 RMD on top, and MAGI jumps to roughly $110,400. That's $1,400 over the 2026 single-filer IRMAA threshold of $109,000 (those 2026 brackets apply to 2024 income; we're using them purely for illustration, since thresholds are indexed each year) — enough to trigger the first surcharge tier on both Medicare Part B and Part D, adding somewhere around $1,148 a year to their premiums, for the same coverage they had the year before.

The gap-years opportunity: converting before RMDs force the issue

Put those two costs together, and the years between when you stop earning a paycheck and when RMDs start (73 or 75, depending on your birth year) start to look like an opportunity rather than just a quiet stretch of retirement. Often no salary, no RMDs yet, and sometimes no Social Security yet either — for a lot of people this is the lowest-income window of their entire retirement, which makes it a good stretch to convert some Traditional 401(k) or IRA money to Roth a bit at a time, while the tax bracket is working in your favor instead of against you.

Every dollar converted during these years is a dollar that won't be sitting in a Traditional account generating a bigger RMD later — which means less future forced income, less pressure on how much of your Social Security gets taxed, and a smaller chance of tripping an IRMAA threshold once Medicare enters the picture. The trade-off is that the conversion itself is taxable the year you do it, and it raises your income that year (which can itself affect IRMAA two years later), so the goal is deliberately small, steady conversions that stay within a target marginal bracket, not one large conversion that creates the very spike you're trying to avoid.

This is a different use case from the Roth conversion ladder we've written about elsewhere, which is really aimed at early retirees needing penalty-free access to funds before 59½. If you're retiring at a more ordinary age with most of your savings sitting in Traditional 401(k)s, IRAs, or SEP IRAs, though, I'd put this closer to essential planning than a nice-to-have.

Sources

• IRS, Required minimum distribution FAQs — first-year deadline, how the amount is calculated, the 25%/10% penalty, the Form 5329 waiver, and Roth exemptions
• Federal Register, Required Minimum Distributions (final regulations, 2024) — birth-year RMD ages (73 and 75) and the Roth 401(k) exemption starting in 2024
• Federal Register, RMDs under SECURE 2.0 (proposed regulations, 2024) — the IRS's stated position that the age for 1959 births is 73
• IRS, Instructions for Form 5329 (2022) — the old 50% penalty, the 25% rate, and the reasonable-cause waiver
• IRS Publication 915 — how much Social Security can be taxed (up to 85%) and the income thresholds
• CMS, 2026 Medicare Parts A and B premiums and deductibles — the $109,000 single-filer threshold and the Part B surcharge
• Medicare.gov, 2026 Medicare costs — Part D surcharge and the two-years-earlier income rule

This article is for educational purposes only and is not tax or financial advice. RMD ages, penalties, Social Security taxation thresholds, and IRMAA brackets can change and vary by individual circumstances — confirm current figures with the IRS, the Social Security Administration, or a licensed tax advisor.