You Have Less Than 3 Months to Complete Your 2026 RMD: 3 Big Mistakes to Avoid

There are only a few weeks left in 2026, which means if you haven't taken your required minimum distributions from your retirement accounts this year, you don't have much time left. With few exceptions, anyone age 73 or older must begin withdrawing their retirement savings, and those with inherited IRAs might also have to take annual distributions, whether you need the cash or not.

If you miss the deadline, the penalty can be severe. You'll pay an extra 25% in taxes on the amount you were supposed to withdraw. You can get that reduced to 10% if you catch and correct your mistake early, but that's still pretty steep.

As such, it's important to avoid any mistakes when making those RMDs. Here are three big ones to watch out for.

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1. Taking RMDs from the wrong account

Between you and your spouse, you probably have more than one retirement account. Perhaps you both have IRAs and old 401(k) accounts from past employers. You might even have multiple accounts of each type. That makes it extremely important to know the RMD aggregation rules.

RMDs may never be aggregated across different account types or account owners. Your spouse's RMD must come from your spouse's accounts, and your RMD must come from your accounts.

You can, however, aggregate the amount held in multiple IRA accounts under an individual's name and make the required withdrawal from just one account. That includes traditional IRA accounts as well as SEP IRAs and SIMPLE IRAs.

Note that the rule doesn't apply to 401(k) accounts sponsored by different employers. Each employer's 401(k) RMD is calculated separately, and withdrawals have to be made from each account. The only employer plan accounts you can aggregate are 403(b) plans.

Unless you have a good reason, it makes sense to consolidate your retirement savings into as few accounts as possible to keep things simple and prevent mistakes. That might include a 401(k) rollover.

2. Assuming a Roth conversion covers your RMD

Roth conversions can be a great way to reduce your RMDs. Since Roth IRAs and Roth 401(k)s aren't subject to RMDs, you can leave more of your investments in your retirement account to compound longer. The catch is, Roth conversions are best done before you reach RMD age.

Once your accounts are subject to required minimum distributions, you have to take that amount out of your retirement accounts first before doing any Roth conversions. While that will reduce your future RMDs, they will likely come at a much higher cost than if you did them between retiring and reaching RMD age.

It might not personally save you much (if anything) in taxes over the long run to perform Roth conversions once you're subject to RMDs. However, it could provide some significant tax relief for anyone inheriting your retirement accounts.

3. Thinking you're exempt

There are some exemptions for RMDs, but you need to know the exact rules to ensure you don't get hit with penalties:

• Roth accounts are exempt from RMDs.
• If you're still working, your current workplace retirement plan account is exempt from RMDs, provided you own less than 5% of the business and the plan allows for the exemption.
• Inherited IRAs for non-spouses (or other eligible beneficiaries) are only exempt from RMDs if the original account holder's death occurred before the year they would reach the RMD age.

If you're unsure whether your account is subject to RMDs, contact a financial professional with your personal situation. It's a small price to pay today to ensure you don't get hit with a major tax penalty down the road.

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