Taking money out of a tax-advantaged account such as an individual retirement account isn’t always as simple as it seems. Miss a rule, and you could face penalties or an unexpected tax bill.
Here are some situations where retirees need to be especially careful when taking money from these accounts.
[See: 12 Ways to Avoid the IRA Early Withdrawal Penalty.]
The Double RMD Trap
Retirement savers must take their first required minimum distribution from a traditional IRA the year they turn 73; that increases to 75 in 2033 for people born in 1960 and later.
It sounds simple enough on the surface, but there’s a quirk. The Internal Revenue Service allows you to delay that initial withdrawal until April 1 of the following calendar year. In other words, someone who turns 73 in 2026 has until April 1, 2027, to take their first RMD.
But that means you’re required to make two withdrawals in 2027: The delayed RMD for 2026 and the 2027 RMD. You’ll be taxed on both withdrawals in 2027.
“Delaying your first RMD into the following year is rarely a savvy tax move,” said Drew Feldman, founder and financial planner at WideFrame Wealth in Los Angeles, in an email.
Two RMDs in one year could push a retiree into a higher tax bracket, increase how much of their Social Security gets taxed, trigger the 3.8% net investment income tax or push someone into a higher threshold for the income-related monthly adjustment amount, Medicare’s income-based surcharge, Feldman added.
“One exception may be where year one income is unusually high and year two falls off a cliff; someone retiring midyear at 73 with a big final paycheck or a year with a business sale,” he said.
Feldman suggested that retirees review their situation with a tax professional before deciding on RMD timing, as there can be several moving pieces.
Penalty for Missed Withdrawals
Missing a required distribution can result in a significant tax bill. Traditional retirement accounts offer tax benefits while you’re saving, but the IRS eventually requires you to take money out and pay taxes on those withdrawals. If you don’t take the required amount, you could face an additional tax.
The SECURE 2.0 Act, which went into effect in 2023, lowered the missed-RMD penalty from 50% to 25%, and to 10% if the mistake is fixed in a timely fashion.
What exactly does that mean?
According to Internal Revenue Code Section 4974(e), the correction window generally runs through the end of the second tax year after the year of the missed RMD, unless the IRS catches the mistake first and sends a letter of deficiency. That extra time can make a meaningful difference for some taxpayers.
“While this likely does not provide substantial penalty savings to many, it certainly has the potential to help some in a big way,” said Jay Fedak, a certified financial planner and owner of Fedak Financial Planning in New Milford, Connecticut, in an email.
“While correcting the mistake immediately and appealing to the IRS via a waiver request has helped taxpayers obtain relief in the past, the new law provides much greater certainty regarding penalty reduction,” he added.
Rules for Inherited Traditional IRAs
The rules for inherited IRAs changed under the SECURE Act, and some of the details weren’t entirely clear until the IRS issued final regulations in July 2024 regarding the treatment of distributions and how to correct withdrawal errors.
If you inherit a traditional IRA from someone who had already started taking RMDs, generally you must continue making yearly withdrawals from the inherited account.
Miss one, and you could face a tax of up to 25% of the amount you should have withdrawn. Fix the mistake within the correction window, generally two years, and that tax drops to 10%.
Staying on top of those withdrawals can be daunting, especially for beneficiaries who may be grieving or dealing with other estate paperwork after the death of a loved one. A financial planner or the account’s brokerage custodian can help.
“Many custodians can set up automated RMD withdrawals from an inherited IRA, but the amount changes every year based on your life expectancy factor and how the IRA’s investments have performed,” said Korrine Sugasawara, CFP and owner of Kite & Compass Financial Planning in San Jose, California, in an email.
She added that most non-spouse heirs who inherit an IRA today have 10 years from the date of the original account owner’s death to fully withdraw the balance. Those who inherit a traditional IRA, as opposed to a Roth, might consider forward-looking tax planning on the withdrawals.
“Think about where your income is headed over the next decade,” Sugasawara suggested. “If you’re expecting increased income or want to stay under a certain tax threshold, it may make sense to withdraw more than the RMD in your lower-earning years to avoid taking a large lump sum in year 10.”
Advantages of Inherited Roth IRAs
With an inherited Roth IRA, the rules become somewhat easier for heirs. Because a Roth IRA is funded with after-tax dollars, there’s no requirement for a non-spouse beneficiary to take annual distributions or a minimum withdrawal amount in the 10-year window following the original account owner’s death.
However, there’s a kicker. The account still needs to be fully emptied by the end of that 10th year..
“The inherited Roth is the rare place where doing nothing is the strategy,” said Marcel Miu, CFP, founder and wealth planner at Simplify Wealth Planning in Austin, Texas, in an email.
“So the plan is usually: Leave it alone for nine years and put a calendar reminder on year 10 to distribute,” he said. “A tax-free wrapper is worth the most when the assets inside it grow, so for most heirs the inherited Roth is where their growth positions, like stocks, belong.”
[READ: 10 Reasons to Save for Retirement in a Roth IRA]
Higher Caps on QCDs and QLACs
Two tools for reducing RMD taxes got a boost for 2026.
The annual limit on qualified charitable distributions, known as QCDs, and the lifetime cap on qualified longevity annuity contracts, QLACs, have risen each year since SECURE 2.0 made them inflation-indexed.
The limit on QCDs rose to $111,000 per person for 2026, up from $108,000 in 2025.
“This allows individuals aged 70½ or older to transfer even more money directly from an IRA to an eligible charity without including the distribution in taxable income,” Fedak said. “For retirees who are already giving to charity, a qualified charitable distribution can also satisfy all or part of a required minimum distribution while keeping that amount out of adjusted gross income.”
A QLAC, meanwhile, is a specific type of deferred income annuity funded from a traditional retirement account, such as a 401(k) or IRA.
The QLAC limit increased to $210,000 in 2026 from $200,000 last year.
“A qualified longevity annuity contract allows a retiree to use part of a qualifying retirement account to purchase guaranteed income in an annuity that may begin as late as age 85,” Fedak said.
That can reduce the amount of money used to calculate RMDs for a period of time, potentially lowering taxable withdrawals before the annuity payments begin.
More from U.S. News
The 401(k) ‘Super Catch-Up’ Contribution Guide for Ages 60+
Guaranteed Income Strategies for Retirement
What to Know About Changes to IRA Required Minimum Distributions for 2026 originally appeared on usnews.com
Update 08/14/26: This story was published at an earlier date and has been updated with new information.
