The IRS just gave retirees more time — but only those who understand the new rules will benefit.
While the agency delayed the latest round of Required Minimum Distribution (RMD) rule changes until 2026, several key updates are already in effect right now.
And missing them could cost retirees big.
For decades, retirees faced one of the harshest penalties in the tax code: a 50% fine for missing an RMD. But thanks to the SECURE 2.0 Act, that punishment has been sharply reduced.
As of this year, the penalty for failing to take a required distribution has dropped to 25%. Better yet, if the mistake is corrected within two years, the penalty falls to just 10%.
That change gives retirees crucial breathing room — especially those juggling multiple retirement accounts or adjusting to new withdrawal schedules. It’s a major shift that turns what was once a financial disaster into a fixable mistake.
“This change is a big win for retirees,” said one tax planner. “The IRS finally acknowledged that one slip-up shouldn’t cost people half their money.”
But that’s only part of the story.
The IRS confirmed that full implementation of the new RMD regulations won’t arrive until 2026. Still, the long-term timeline is clear: the RMD starting age will gradually rise from 73 today to 75 by 2033.
That means anyone born after 1960 can delay taking distributions for three additional years — a major opportunity to keep money invested longer and manage taxable income more efficiently.
For retirees turning 73 in 2025, timing will be everything. You’ll have two choices: take your first RMD by December 31, 2025, or delay it until April 1, 2026. The second option allows you to push that income into a new tax year, possibly lowering your 2025 taxable income.
But there’s a catch — if you delay, you’ll still need to take your 2026 RMD by the end of that year, meaning two withdrawals in one calendar year. For some retirees, that could nudge total income into a higher bracket.
The right strategy depends on your broader income picture — pensions, Social Security, and investment earnings all play a role. Tools like FINRA’s RMD Calculator can help model different scenarios to avoid what tax professionals call “bracket creep.”
These timing decisions matter more than ever. As retirees live longer and face uncertain markets, the ability to control taxable income through strategic RMD management can extend savings and reduce unnecessary losses to taxes.
Even small changes in timing can save hundreds or thousands of dollars a year — especially for those with multiple retirement accounts.
The bottom line: the IRS delay buys time, but not ignorance. Retirees who take advantage of this window can turn new rules into real tax savings. Those who ignore it could still end up paying more than they need to.
In retirement, the difference between keeping what you’ve earned and giving it away often comes down to timing — and now is the time to plan.