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What are the most common mistakes with required minimum distributions (RMDs), and how do you avoid them?

By FastBuySale Newsroom · 5 Nov 2026 · 19m ago

Mistake 1: getting the timing wrong

Common mistakes with required minimum distributions (RMDs) and how to avoid them comes down to a few rules. The IRS says you generally must start withdrawing from traditional, SEP and SIMPLE IRAs and workplace retirement plans in the year you reach age 73, take at least the minimum every year by December 31, and pay an excise tax of 25% on any shortfall, cut to 10% if you correct it within two years.

Most errors come from timing, from mixing up accounts, or from assuming someone else did the maths. The IRS is clear that although your IRA custodian or plan administrator may calculate the RMD, the account owner is ultimately responsible for taking the correct amount.

The first RMD is for the year you reach 73, but the IRS lets you delay it until April 1 of the following year. Every later RMD is due by December 31.

The trap: delaying the first one means two RMDs in one year. The IRS example: if you reached 73 in 2024, your first RMD was due by April 1, 2025, based on your December 31, 2023 balance, and your second by December 31, 2025, based on your December 31, 2024 balance. Two withdrawals in one tax year can push you into a higher bracket.

Fix: compare your expected income in both years. If the second year already looks heavy, take the first RMD in the year you turn 73.

Still working? Participants in a workplace plan such as a 401(k) can delay RMDs from that plan until the year they retire, unless they own 5% of the business sponsoring the plan. This exception does not apply to traditional, SEP or SIMPLE IRAs, which require RMDs from 73 even if you are still working.

Readers evaluating Required minimum distribution should separate marketing claims from the actual rule text that governs their account or product. When two summaries disagree, the governing document or statute wins. If a rule depends on your age, filing status, or income band, re-check it when any of those facts change. Life events quietly move people across thresholds they last reviewed years earlier.

Educational explainers like this one cannot replace personalized advice for complex situations such as divorce orders, inherited accounts, or cross-border tax residency. Escalate those cases to a qualified professional. When in doubt about a number that changes every year, describe your plan qualitatively first, then look up the current official figure for the tax year you care about before you act.

Mistake 2: miscalculating the amount

The IRS says an RMD is generally calculated for each account by dividing the prior December 31 balance by a life expectancy factor from the tables in Publication 590-B.

Most owners use the Uniform Lifetime Table. In that table the factor is 26.5 at age 73, 25.5 at 74 and 24.6 at 75. Worked example: an IRA worth $265,000 on December 31 gives an RMD at 73 of $265,000 / 26.5 = $10,000.

Wrong table: a different table applies if your sole beneficiary is a spouse more than 10 years younger, and beneficiaries of inherited IRAs use the Single Life Expectancy table. Using the wrong one changes the amount.

Wrong balance: use the balance on December 31 of the previous year, not today's value. Check your statements, and project future balances with the and

Overpaying does not bank credit. The IRS says you can withdraw more than the minimum, but an excess in one year cannot be applied to a future year's RMD.

Spot-check the custodian figure. Multiply nothing, guess nothing: take the December 31 balance from your year-end statement, divide by the factor for the age you reach this year, and compare the result with the amount your provider shows.

A useful habit is to write down your goal, time horizon, and cash buffer before you change any election related to Required minimum distribution. Decisions made during a stressful week are the ones people reverse later at a cost. Educational explainers like this one cannot replace personalized advice for complex situations such as divorce orders, inherited accounts, or cross-border tax residency. Escalate those cases to a qualified professional.

Compare fees the same way you would compare two similar listings before you buy: look at what you pay each year, what you get, and whether a simpler option meets the same need. Readers evaluating Required minimum distribution should separate marketing claims from the actual rule text that governs their account or product. When two summaries disagree, the governing document or statute wins.

Mistake 3: taking it from the wrong account

IRAs can be combined: the IRS says an IRA owner must calculate the RMD separately for each IRA but can withdraw the total from one or more of the IRAs. 403(b) contracts work the same way among themselves.

Workplace plans cannot: RMDs from other types of plans, such as 401(k) and 457(b) plans, must be taken separately from each plan account. Taking your 401(k) RMD from an IRA leaves the 401(k) short and open to the excise tax.

Rolling it over: the IRS says RMD amounts cannot be rolled over into another tax-deferred account. If you move money between accounts in an RMD year, take the RMD first.

Fix: list every account, its December 31 balance and its type each January, and mark which RMDs can be pooled. Consolidating old 401(k)s can reduce the number of separate withdrawals, but check fees and features first; see

Keep digital and paper copies of confirmations after every change. Screenshots of election pages, email receipts, and year-end statements make tax season and job changes far less chaotic. Compare fees the same way you would compare two similar listings before you buy: look at what you pay each year, what you get, and whether a simpler option meets the same need.

Mistake 4: Roth confusion, inherited accounts and the penalty

Roth accounts: the IRS says RMD rules do not apply to Roth IRAs or designated Roth accounts in 401(k) or 403(b) plans while the owner is alive. Beneficiaries of Roth accounts are subject to RMD rules, so heirs should not assume an inherited Roth needs no withdrawals. Read

Inherited accounts: for owners who die after December 31, 2019, the SECURE Act generally requires the entire account to be distributed within 10 years, with some exceptions for eligible designated beneficiaries such as spouses. Check Publication 590-B for your situation.

Tax: RMDs are taxed at your income tax rate, except any part that is a return of basis or a qualified Roth distribution. Plan withholding so you are not hit with a surprise bill.

Missed one? The shortfall may face a 25% excise tax, or 10% if corrected in time. File Form 5329. The IRS says the penalty may be waived if the shortfall came from reasonable error and you are taking reasonable steps to fix it: take the missed amount, then file Form 5329 with a letter of explanation.

Avoid it entirely: set up automatic annual withdrawals with your custodian, check the amount yourself, and set a calendar reminder for early December. Keep in mind that inflation erodes fixed withdrawals; review with the

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If a rule depends on your age, filing status, or income band, re-check it when any of those facts change. Life events quietly move people across thresholds they last reviewed years earlier. Automation helps. Calendar reminders for annual reviews, automatic transfers, and beneficiary checkups reduce the chance that a good plan dies from neglect.

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