What Are RMDs and When Do They Start?

Fidelis Wealth Advisors |
Categories
Retirement

At the beginning of every October, our entire Fidelis team comes together to process Required Minimum Distributions (RMDs) for our clients.

Exciting stuff, eh?

But here's the thing - while it might not sound glamorous, this is exactly the kind of proactive planning that keeps our clients on track. So let us break it down…

What are RMDs and why do they matter?

Once you hit your 70s, the IRS can force you to withdraw money from your retirement accounts – whether you need it or not.¹

A RMD is a mandatory withdrawal from tax-deferred retirement accounts like traditional IRAs, 401(k)s, and 403(b) plans.

The SECURE 2.0 Act raised the starting age to 73 for those born between 1951-1959. If you were born in 1960 or later, you will not start RMDs until age 75.

Your first RMD is due by December 31 of the year you turn either 73 or 75, depending on your birth year, though you can delay it until April 1 of the following year. But that means you would take two distributions in one year, which could push you into a higher tax bracket.

The amount is calculated by dividing your account balance from December 31 of the prior year by a life expectancy factor from IRS tables.

Missing an RMD results in a 25% penalty on the amount not withdrawn, though that can be reduced to 10% if corrected within two years.

But there is one exception: if you are still working and do not own more than 5% of your employer, you can delay RMDs from that current employer plan until you retire.²

Roth IRAs do not have RMDs during your lifetime.

Why does Fidelis have "RMD Month"?

Because staying on top of these for our clients means nobody gets surprised by penalties, tax bills, or "wait, I was supposed to do WHAT?" moments in December.

Our team has spreadsheets, double-checks, and yes - probably too much coffee happening at the beginning of every October. All to make sure this required (and slightly annoying) part of retirement planning is handled smoothly for every client.

If you're approaching RMD age or already there, let's make sure you've got a plan. Because nothing ruins a good retirement like unnecessary penalties.

Questions about RMDs and how they could impact you? We're here to help!

 

Sources

  1. IRS, 2025 [https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-required-minimum-distributions-rmds]
  2. IRS, 2026 [https://www.irs.gov/retirement-plans/retirement-plan-and-ira-required-minimum-distributions-faqs]

Risk Disclosure: Investment advisory services are offered through Fidelis Wealth Advisors, LLC, an SEC registered investment advisor. This content is for informational purposes only and does not constitute investment advice or a recommendation to buy or sell any securities. Investing involves risk and results may vary, there is a possibility of loss, under-performance, or that past performance is not indicative of future results. Opinions expressed herein are those of the advisor and are subject to change without notice.