Ed Slott: Thanks, Christine. Great to be back.<\/p>\n
Should You Delay Your First RMD?<\/p>\n
Benz: It\u2019s great to have you. And we are talking about retirement and taxes. And one thing I\u2019ve found retirees really love to hate is required minimum distributions<\/a>. So, we want to talk about the ins and outs of RMDs, starting with what\u2019s called the required beginning date, which, for today\u2019s retirees, it\u2019s April 1 of the year after they turn 73. Should people wait until that required beginning date to take their first RMD or take it in the previous year when they actually turn 73? Do you have an opinion on that?<\/p>\n Slott: Yes. In most cases, it pays to take it in the previous year, the year you turn age 73. Because if you wait till April 1 of the next year, and that\u2019s the only year, your first year, that you can wait. And it wasn\u2019t an April Fool\u2019s joke, as people think. It was to give people a three-month grace period when they first switched to RMDs. It just happened the date was April 1. But if you wait till April 1, you\u2019d have to take your first two distributions, RMDs, that year, probably a larger tax bill. It\u2019s almost always better, all things being equal, to take two separate RMDs in two different years, probably a lower tax bill in each year.<\/p>\n 5 Things You Need to Know About RMDs This Year<\/a>Understanding IRA Aggregation Rules for RMDs<\/p>\n Benz: In the common situation when someone has multiple traditional IRAs<\/a>, can you talk about how it works? Do they have to take an RMD from each of those accounts, or can they take the RMD from one account as long as they calculate the right amount that needs to come out overall?<\/p>\n Slott: That\u2019s exactly what they can do. It\u2019s called aggregation rules. If you have separate IRAs, first of all, under the tax law, maybe this is an easier way to understand it, you only have one IRA in a lot of different baskets. That\u2019s how the tax law looks at it. So you can take your RMD, your total RMD, just as you said, calculated for all your RMDs. Maybe you have five or 10 of them. Years ago, we had people who had way more than that. That was the years, this shows how old I am, when people opened up new IRAs at the bank because they got a free toaster. So they would have 10 or 15 IRAs, not so much anymore. I don\u2019t know. Again, that\u2019s an age thing. People probably don\u2019t even know what I\u2019m talking about. But yes, there was a time banks gave out toasters. Do you remember that?<\/p>\n Benz: A little bit. I remember banks giving out freebies, yes.<\/p>\n Slott: Yeah, for new accounts. All right. But now people have different IRAs for different reasons, maybe different beneficiaries, different investments, whatever reason. As long as you take exactly what you said, the total RMD calculated over all your own IRAs, not inherited IRAs<\/a>, that\u2019s a different animal. Even if you take it all from one, that satisfies all of them.<\/p>\n Benz: OK.<\/p>\n Slott: That includes SEP and Simple IRAs, too, in that batch.<\/p>\n Use Investor’s portfolio tools to help keep your investment strategy aligned as you begin taking distributions.<\/a>RMD Timing Strategies for Retirees<\/p>\n Benz: I wanted to ask about timing of those RMDs. Is there a right time in a given year to take an RMD? And also I\u2019d like your opinion on taking those RMDs monthly, quarterly, or just one annual sum. Does it matter?<\/p>\n Slott: It doesn\u2019t really matter as long as you take the full amount by the end of the year. And I wouldn\u2019t wait till the end of the year. Most people take it toward the end of the year, which is normal because things may happen during the year. You\u2019re still going to have to take it, but I\u2019m not a big fan of the monthly or quarterly because you can forget. It\u2019s easy to remember, take it at one time. And if you do it, I would take it no later than\u2014if you\u2019re waiting toward the end of the year\u2014no later than the first week in December. I wouldn\u2019t take it after that because that\u2019s when the banks and the financial institutions are getting deluged with requests, and sometimes they can\u2019t even get them done. Some of them even have cutoffs\u2014the 15th, the 20th of December, toward the end of the year.<\/p>\n And the problem is, if you ever want to reach anybody at these institutions in December, if you have a question, anybody that knows, in these institutions, anybody that knows anything about RMDs knows to take those last two weeks\u2019 vacation from the financial institution. You won\u2019t find them there. So try and get them done. You could do it earlier, but I would say later in the year is probably better\u2014for one other reason, too. For people who take QCDs, qualified charitable distributions, they can satisfy an RMD, but they only work if you do the QCD before the RMD. I sound like an acronym game, but QCD, the qualified charitable distribution, before the RMD. For example, let\u2019s say your RMD for the year is $5,000, but you normally give to charity anyway, and you like the idea of giving your IRA. It\u2019s a direct transfer from your IRA to the charity, a qualified charitable distribution.<\/p>\n If you do that first for the 5,000, just to make it easy, that was the same amount as your RMD, you don\u2019t even have to take the RMD, then it\u2019s done. But if you had taken the RMD first and then you do the QCD, you can\u2019t offset an RMD already taken. The QCD will still work on the next 5,000 you took out, but you\u2019ll still have to pay tax on an RMD taken before you do a QCD. So that may be a reason to hold off toward the end of the year because many people do QCDs when they\u2019re thinking about gifts in November and December when they make their other gifts they think of at holiday time. That\u2019s when they make gifts. So you want to try and time it so if you\u2019re doing QCDs, do them first before the RMDs.<\/p>\n QCD Contribution Limits<\/p>\n Benz: OK, that\u2019s helpful. And I know you love that QCD maneuver. There is a contribution limit, right? There\u2019s a limit on how much you can get into the QCD.<\/p>\n Slott: For this year, I was just looking at it, it\u2019s $111,000 this year. It\u2019s $100,000. The reason I look it up is because it\u2019s $100,000, but there\u2019s inflation, cost-of-living increases. So, for 2026, you can do up to $111,000, not per account. Remember, we were talking about if you had 10 accounts. Per IRA owner. But if you are a married couple, you each have your own limit. So, you could do up to $111,000, if you want to give that much, for the husband and the wife can each do that.<\/p>\n Can You Convert to a Roth IRA After RMDs Begin?<\/p>\n Benz: We\u2019ve often talked about how Roth assets aren\u2019t subject to these RMDs. That\u2019s one of the reasons you like them.<\/p>\n Slott: Oh yeah.<\/p>\n Benz: But if RMDs have already started or are about to, is it too late to convert to Roth and get away from the RMDs, at least for that portion of the account?<\/p>\n Slott: It is too late because you still have to take the RMD. The RMD cannot be converted, so it costs more to convert once you\u2019re in RMD territory. We always encourage people to get conversions done before the year you turn age 73. So if you\u2019re turning 73 next year, this would be the year to get your last conversions in. It doesn\u2019t mean you can\u2019t convert. It just costs more because you first have to take the RMD. The first dollars out are deemed the RMD, and those can\u2019t be converted.<\/p>\n On previous episodes Ed Slott: Don\u2019t Waste Your Low-Tax Years in Retirement <\/p>\n Christine and Ed talk about withholding taxes versus quarterly payments, Medicare\u2019s IRMAA surcharge, and how new retirees can create a tax-smart withdrawal strategy.<\/p>\n Tax expert Ed Slott talks with Christine Benz about when Roth conversions make sense, why the years before RMDs can be especially advantageous, and how to handle the tax bill.<\/p>\n Benz: I wanted to discuss penalties with you, Ed, because a few years back there were some changes to the penalties levied on those missed RMDs if you happen to forget. Can you talk about the changes? They seem like it\u2019s a little less punitive to miss an RMD than it once was, but what are you hearing? Are people paying these penalties? Are they facing significant penalties for missing RMDs?<\/p>\n Slott: Almost nobody is paying a penalty. It used to be 50%. That was draconian, and almost nobody paid that. I only saw one case, which is an oddball case. I\u2019m not even going to get into the details. It came out of a private letter ruling where somebody didn\u2019t know the law, and they asked the IRS if they could pay a penalty, and the IRS said, \u201cSure.\u201d It\u2019s a crazy ruling because they didn\u2019t understand. They missed something. They didn\u2019t have to do it at all. But since they asked, the answer was yes. So it was a 50% penalty, and then it was reduced by recent laws, Secure 2.0, to 25%, which is still pretty hefty, and then reduced to 10% if you made up the shortfall within two years. But even that, all of that can go away if\u2014it can be waived by filing Form 5329 with your tax return and ask for a waiver of the penalty. But to get the waiver, and IRS waives it in almost every case where you did two things: You discovered the error first, before IRS did, because that shows good faith, and you took immediate corrective action.<\/p>\n![\"\"](\"https:\/\/www.newsbeep.com\/nz\/wp-content\/uploads\/2026\/09\/TVZE2DEORZFTNKIMSRIZSMZMKQ.png\")
<\/a>Early Retirees: Why Now Is the Time to Convert Your IRA to Roth <\/p>\n<\/a>What Happens if You Miss an RMD?<\/p>\n