Mistake: Postponing Your First RMD

As a rule, you have to begin taking RMDs in the year in which you turn 73 years old if you were born before 1960 and at age 75 if you were born later.

Nevertheless, respecting that new “distributors” might need some extra time to prepare for the withdrawal process, the IRS will let you defer your first RMD to as late as April 1st of the following year.

Even though that might sound convenient, it may not be in your best financial interest. Waiting for that first payment would mean you have to take two RMDs in less than 12 months: the one you deferred to the end of March and the regular one that’s due on December 31st.

If your accounts, and their RMDs, are relatively large, that would potentially mean two sizable taxable withdrawals in the same year.

This could push you into a more substantial tax bracket and perhaps subject you to the Medicare surcharge, depending on your modified adjusted gross income. In these types of scenarios, experts recommend abstaining from the extension.

Instead, they suggest you spread the withdrawals over both years by taking your first payment by December 31st of the year you turn 73 years old.