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- If You Turn 73 in 2026, You Have a Key Deadline Coming Up (financebuzz.com)
If you’ll turn 73 in 2026, it’s important to know that the IRS will require you to start taking mandatory annual withdrawals from your tax-deferred retirement accounts. These withdrawals, known as required minimum distributions (RMDs), are designed to ensure that taxes on your retirement savings are eventually paid. Missing the RMD deadline can lead to costly penalties, so understanding your options and timing is key.
What You Need to Know About RMDs at Age 73
Under the SECURE Act 2.0, age 73 is the new starting point for taking RMDs from traditional IRAs, SEP IRAs, SIMPLE IRAs, and most employer-sponsored plans like 401(k)s and 403(b)s. You must withdraw a minimum amount each year, and that amount is subject to ordinary income tax.
For your first RMD, you have two options: take the withdrawal by December 31, 2026, or delay it until April 1, 2027. While the latter offers an extension, it can create a tax challenge because you’ll have to take your second RMD by December 31, 2027, resulting in two taxable withdrawals in the same year.
How to Calculate Your RMD
To calculate your RMD, divide your retirement account balance as of December 31, 2025, by the IRS life expectancy factor for age 73, which is 26.5. For example, a $530,000 balance would result in an RMD of about $20,000. Although many custodians provide this calculation, the responsibility to withdraw the correct amount rests with you.
What Counts Toward Your RMD?
RMDs apply only to certain accounts and types of withdrawals. Roth IRAs are exempt from RMDs, and rollovers do not count toward satisfying your RMD requirement. If you have multiple 401(k) accounts, each one requires a separate withdrawal-you cannot combine them as you can with traditional IRAs.
The Risks of Missing Your RMD
Failing to take your required distribution triggers a hefty IRS penalty: 25% of the amount you should have withdrawn. Correcting the error within two years may reduce the penalty to 10%, but it’s best to avoid this costly mistake altogether.
Tax Implications of RMDs
Because RMDs add to your overall taxable income, they can affect how much of your Social Security benefits are taxed and whether you face higher Medicare premiums through IRMAA surcharges. For single filers, IRMAA surcharges begin at $109,000 in modified adjusted gross income; for couples, the threshold is $218,000.
Strategies to Manage Your RMD and Taxes
Most financial advisors recommend taking your first RMD in 2026 rather than delaying until 2027. Doing so spreads your income across two tax years instead of concentrating it all in one, helping you avoid jumping into a higher tax bracket and triggering additional taxes or surcharges.
If you’re charitably inclined, consider a Qualified Charitable Distribution (QCD). In 2026, you can transfer up to $111,000 directly from your IRA to a qualified charity without counting that amount as taxable income. Couples can double this amount if both spouses have IRAs, providing a powerful way to reduce tax liability.
What to Do With Your RMD
If you don’t need the withdrawn funds for living expenses, you can reinvest them-but not back into a tax-deferred account. Options include placing the money in a taxable brokerage account or, if eligible, contributing to a Roth IRA. This strategy keeps your money working for you instead of sitting idle.
Bottom Line
For those turning 73 in 2026, taking your first RMD by December 31, 2026, is often the smarter move. It helps you avoid stacking two distributions in one year, reduces the risk of higher Medicare premiums and Social Security taxes, and allows greater control over your financial and tax situation.
Financial Tips for All Ages
Regardless of your current financial situation, there are always ways to improve your money management and build wealth:
- Increase your income: Explore side jobs or other income streams that fit your lifestyle.
- Grow your assets: Leverage time and compound interest by investing wisely.
Consulting a financial professional can help you plan for early retirement.
- Take advantage of benefits: Seniors can access numerous discounts and benefits-make sure you’re not missing out.
Also, regularly review your expenses, like car insurance, to ensure you’re getting the best deals and avoid hidden money drains.
By staying informed and proactive about your RMDs and overall finances, you can better protect your retirement savings and keep more of your income where it belongs-in your hands.
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- If You Turn 73 in 2026, You Have a Key Deadline Coming Up (financebuzz.com)