What Are the Most Common Required Minimum Distribution Mistakes, and How Do You Avoid Them?
Retirees lose thousands of dollars a year to required minimum distribution mistakes, and most don't find out until the tax bill shows up. Missed deadlines, surprise tax bracket jumps, and misunderstood rules that were supposed to protect retirement income are far more common than people realize.
In this video, we walk through the 10 biggest RMD mistakes and how to avoid every one. Handled correctly, your RMD strategy can actually lower your taxes and strengthen your retirement plan rather than creating avoidable damage.
Required minimum distribution planning connects directly to how your overall retirement tax picture is structured. You may also find our guide on what to do with a large IRA before required minimum distributions begin helpful for understanding the planning window before distributions are required.
The 10 Biggest RMD Mistakes
Each of these mistakes has real cost. Some are penalties. Some are avoidable taxes. Some are missed opportunities that can't be recovered once the window closes.
Mistake 1: Waiting Until the Last Minute
Waiting until December to deal with your required minimum distribution creates unnecessary risk. The market could be down when you're forced to sell. Your custodian could be backed up with year-end volume. Or you might not realize until it's too late that taking the full amount in one shot pushes you into a higher tax bracket. Taking distributions earlier in the year gives you more control over timing and tax impact.
Mistake 2: Forgetting to Take the RMD Entirely
Missing a required minimum distribution used to carry a brutal penalty. The IRS has reduced it, but it's still meaningful: a 25% excise tax on the amount you failed to withdraw, reduced to 10% if you correct it within two years. People miss RMDs more often than you'd think, especially with accounts spread across multiple institutions.
One rule that trips people up constantly: IRA required minimum distributions can be aggregated. If you have several IRAs, you can calculate the total and take it from any one account or split it across accounts however you choose. But 401(k) and other employer plan RMDs do not work that way. Each 401(k) requires its distribution to come out of that specific plan. You cannot satisfy a 401(k) RMD by pulling extra from an IRA, and you cannot combine two different 401(k)s into one distribution.
Mistake 3: Assuming the RMD Calculation Is Automatically Correct
Most people assume their custodian calculates everything perfectly. Sometimes they do. But incorrect birthdates, inherited IRA confusion, and calculation errors happen more than they should. The required minimum distribution is your responsibility, not the custodian's. Double-check the number yourself, especially if you've inherited an IRA, hold multiple accounts, or recently lost a spouse.
Mistake 4: Taking One Lump Sum Without a Plan
Many retirees automatically pull the entire required minimum distribution in December every year. That's not always the best approach. Monthly or quarterly withdrawals can create smoother income and better tax management. For others, timing withdrawals around market conditions makes more sense. Your RMD shouldn't happen by accident. It should fit your overall income and tax strategy.
Mistake 5: Ignoring the Tax Impact
Your required minimum distribution counts as taxable income, and a lot of retirees are shocked by how much their taxes jump once distributions begin. An RMD can increase Medicare premiums through IRMAA surcharges, make more of your Social Security benefits taxable, and push you into a higher bracket, all at once. At this stage of retirement, growing your money isn't the primary goal. Keeping more of what you've already built is.
Mistake 6: Skipping Roth Conversions Before RMD Age
This is one of the biggest missed opportunities in retirement planning. Many people wait until required minimum distributions start before thinking about tax strategy. But the years right before the start of required minimum distributions are often the best window for Roth conversions.
Once required distributions begin, taxable income often rises significantly. Conversions done strategically in the lower-income years before that point can reduce future required distribution amounts and lower lifetime taxes. Waiting until distributions are already forced on you means losing the window to act.
For a deeper look at how to approach this, see our video on how much is too much when converting to Roth before required distributions begin .
Mistake 7: Thinking You Can Roll the RMD Back
Once a required minimum distribution comes out of the account, it's out. You cannot roll it back into an IRA to undo the tax. If you don't need the money, you still have options: invest it in a taxable brokerage account, gift it to family, or use a charitable strategy. But the distribution itself is generally taxable once it's taken and cannot be reversed.
Mistake 8: Missing Qualified Charitable Distributions
If you're charitably inclined, this strategy is one of the most overlooked opportunities available. A Qualified Charitable Distribution sends money directly from your IRA to a qualified charity and can satisfy your required minimum distribution without adding that amount to your taxable income. You must be age 70 ½ or older to use this strategy.
For 2026, you can give up to $111,000 per person this way. If you're married and you each have your own IRA and meet the age requirement, that's up to $222,000 for the household, but each spouse has to use their own account to access their own limit. The rules matter: the money has to go directly to the charity. If it touches your hands first, you generally lose the tax benefit.
Mistake 9: Misunderstanding Inherited IRA Rules
Inherited IRA rules changed significantly after the SECURE Act, and there's still widespread confusion. Many beneficiaries assume they can stretch distributions over their own lifetime the way the old rules allowed. In most cases now, the account has to be emptied within 10 years, and depending on the specific situation, annual required distributions may still apply during that window.
For a full breakdown of how inherited IRA rules work, see our complete guide to inherited IRA rules .
Mistake 10: Looking at the RMD in Isolation
This is the most expensive mistake of all, and it's the one that ties all the others together. Your required minimum distribution isn't just a number on a form. It interacts with your taxes, your Social Security income, your Medicare premiums, your investment strategy, and your estate plan.
When people only focus on taking the required amount each year without looking at the full picture, they miss the planning opportunities that could have meaningfully reduced their lifetime tax burden. The RMD is a trigger for a broader conversation, not the end of it.
Frequently Asked Questions About Required Minimum Distribution Mistakes
What is the penalty for missing a required minimum distribution?
Missing a required minimum distribution triggers an excise tax of 25% on the amount you failed to withdraw. That penalty drops to 10% if you correct the missed distribution within two years. The IRS reduced the penalty from the previous 50% rate under SECURE 2.0, but it's still a significant and avoidable cost. If you realize you've missed an RMD, correcting it promptly is the most important step. Accounts spread across multiple institutions are a common reason people miss distributions without realizing it.
Can you aggregate required minimum distributions across multiple IRAs?
Yes, for IRAs. If you have multiple traditional IRAs, you can calculate the total required minimum distribution across all of them and take the full amount from any single account or split it however you choose. This gives you flexibility to pull from the account that makes the most sense given market conditions or tax planning. However, 401(k) and other employer plan required distributions do not work this way. Each 401(k) requires its own distribution taken from that specific plan. You cannot satisfy a 401(k) RMD by pulling extra from an IRA.
How does a required minimum distribution affect Medicare premiums?
Required minimum distributions count as ordinary income in the year they're taken. If that income pushes your modified adjusted gross income above IRMAA thresholds, your Medicare Part B and Part D premiums can increase significantly starting two years later. The IRMAA surcharge operates as a cliff, meaning one dollar over the threshold triggers the full increase. This interaction between required distributions and Medicare premiums is one of the reasons managing the size and timing of distributions matters beyond just the income tax impact.
What is a Qualified Charitable Distribution and how does it help with RMDs?
A Qualified Charitable Distribution is a direct transfer from your IRA to a qualified charity. It counts toward satisfying your required minimum distribution for the year without the distribution amount being added to your taxable income. For 2026, the limit is $111,000 per person per year. If you're married and each spouse has their own IRA and meets the age requirement, the household limit is $222,000. The money must go directly from the IRA to the charity. If it's paid to you first, the tax benefit is generally lost. This strategy is particularly valuable for charitably inclined retirees who don't need the required distribution for living expenses.
Can you put a required minimum distribution back into an IRA?
No. Once a required minimum distribution is taken out of the account, it cannot be rolled back into an IRA. This is one of the key differences between required distributions and other types of withdrawals. If you don't need the money, you can invest it in a taxable brokerage account, use it for gifting, or direct it to a charity through a Qualified Charitable Distribution before it's distributed. But once the required amount is in your hands and has been counted as a distribution, the tax is owed and the money cannot re-enter a tax-deferred account.
How do inherited IRA required minimum distributions work after the SECURE Act?
Under the SECURE Act, most non-spouse beneficiaries who inherit an IRA must fully distribute the account within 10 years of the original owner's death. The old stretch IRA rules that allowed distributions over the beneficiary's lifetime generally no longer apply. Whether annual distributions are also required during the 10-year window depends on whether the original owner had already reached the start of their required minimum distributions before passing. If they had, annual distributions are required each year in addition to the 10-year deadline. The rules vary significantly by beneficiary type, so confirming which rules apply to your specific situation is essential before taking any action.
Why should I do Roth conversions before required minimum distributions begin?
The years between retirement and the start of required minimum distributions are often the most favorable window for Roth conversions. During those years, income may be lower than it will be once distributions are forced on you, which means conversions can be done at a lower tax rate. Converting pre-tax balances to Roth during this window reduces the size of the traditional IRA that generates future required distributions, which in turn reduces future taxable income. Once required distributions begin, taxable income typically rises and the opportunity to convert at favorable rates narrows. Waiting until required distributions are already happening means losing the most efficient conversion window.
Who is responsible for calculating the correct required minimum distribution amount?
You are. While many custodians provide RMD calculations as a service, the responsibility for taking the correct amount from the correct accounts by the deadline rests with you. Custodians can and do make errors, particularly with inherited IRAs, accounts involving recent spousal changes, or situations involving multiple account types. Double-checking the calculation yourself, especially if your situation has changed recently, is the safest approach. Using an incorrect calculation provided by a custodian doesn't protect you from the penalty on any shortfall.
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Investment advice is offered through Bayntree Wealth Advisors, LLC, an SEC-registered investment adviser. Insurance and annuity products are offered separately through Bayntree Planning Group, LLC. Bayntree does not provide, and no statement contained herein shall constitute, tax or legal advice. You should consult a tax or legal professional on any such matters. Opinions expressed herein are solely those of Bayntree Wealth Advisors. All content is for informational purposes only and is not intended to provide the basis for any financial decisions.
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