Lifestyle

The Retirement Account Mistake Most People Don’t Discover Until They Owe the IRS Thousands

By Erica Coleman · September 10, 2026

You turned 73. Nobody told you the IRS now expects you to withdraw a specific amount from your retirement accounts every year — and the penalty for getting it wrong is 25% of the amount you should have taken.

Required minimum distributions are the IRS’s way of ensuring that tax-deferred retirement money doesn’t stay tax-deferred forever. Once you reach the required age, you must withdraw a minimum amount annually from your traditional IRAs, 401(k)s, 403(b)s, and other pre-tax accounts. In 2024, roughly 6.7% of Vanguard investors at RMD age missed their yearly withdrawal — a collective error that could cost up to $1.7 billion in IRS penalties annually.

Here’s where most people go wrong.

Not knowing your RMD age — which changed recently. Under SECURE 2.0, the age at which RMDs begin depends on your birth year. If you were born between 1951 and 1959, your first RMD is due the year you turn 73. If you were born in 1960 or later, it’s 75. Many retirees still believe RMDs start at 70½ — the rule that applied before 2020. Using the wrong starting age means either withdrawing too early (wasting tax-deferred growth) or too late (triggering the penalty).

Delaying the first RMD and getting hit with two in one year. You can delay your first RMD until April 1 of the year after you turn 73. But if you do, you must take your second RMD by December 31 of that same year — meaning two taxable withdrawals in a single calendar year. Two RMDs in one year can push you into a higher tax bracket and trigger Medicare’s Income-Related Monthly Adjustment Amount, which increases your Part B and Part D premiums for the following year.

Forgetting that each account has its own RMD calculation. If you have three traditional IRAs, each one has a separate RMD calculated from its own December 31 balance. You can aggregate IRA withdrawals — taking the total from any combination of IRA accounts. But 401(k)s must satisfy their RMDs individually from each plan. Consolidating accounts before RMD age simplifies the math and reduces the risk of missing one.

Assuming Roth accounts require RMDs. They don’t — during your lifetime. Roth IRAs have no RMDs while the owner is alive, and starting in 2024, Roth 401(k)s are also exempt. But inherited Roth IRAs from non-spouse beneficiaries DO require distributions under the 10-year rule. If you inherited a Roth IRA from someone who died after 2019, the account must be fully distributed within 10 years — and if the original owner had started RMDs, annual withdrawals during that 10-year window may also be required.

Not using the qualified charitable distribution strategy. If you’re charitably inclined and 70½ or older, you can direct up to $105,000 per year from your IRA directly to a qualifying charity — and the amount counts toward your RMD without being included in your taxable income. It’s called a qualified charitable distribution, and it’s one of the most tax-efficient strategies available to retirees who already give to charity. The money must go directly from the IRA custodian to the charity — it can’t pass through your hands first.

The penalty for missing an RMD is 25% of the amount you should have withdrawn — reduced from the previous 50% under SECURE 2.0. If you correct the mistake within two years, the penalty drops to 10%. But on a $20,000 RMD, even 10% is $2,000 — for a withdrawal you were going to make anyway. The deadline is December 31. The calculation takes 10 minutes. The cost of forgetting takes years to recover from.