What Happens If You Miss Your 2026 RMD Deadline?

Saving for retirement in a traditional IRA or 401(k) often seems like a good idea at the time. Roth retirement plans don't give you a tax break on your contributions. But traditional retirement plans do. And when you're earning a decent wage and are therefore in a higher tax bracket, that's huge.

But many people inevitably regret the decision not to save in a Roth retirement plan when they get older and realize their money can't grow in a tax-advantaged fashion forever. Traditional retirement accounts force saved to take mandatory withdrawals called required minimum distributions, or RMDs.

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RMDs start at 73 or 75, depending on your year of birth. And they can be a huge pain if you don't need the money, since they can create an automatic tax bill.

But as annoying as those taxes may be, there are even worse consequences for not taking an RMD on time. So it's important to avoid missing the deadline this year -- and in future years.

When are RMDs due?

RMDs are due by Dec. 31 each year. However, there's an exception for your first one.

If you're turning 73 this year and will therefore be subject to an RMD, you can defer it to April 1 of next year. But in that case, you'll have to take your second RMD in 2027 by Dec. 31. That means two RMDs in a single year, which could have a big tax impact.

If you miss your 2026 RMD, or any RMD, for that matter, you risk a 25% penalty on whatever sum you don't remove from your savings. If you correct your mistake within two years, you may be able to get that penalty knocked down to 10%. But either way, you're looking at a penalty if the right amount of money doesn't come out of your savings by Dec. 31.

Plan ahead to avoid a crunch

Some people like to put off their RMDs until the very end of the year so their money gets a little extra tax-deferred growth. This might seem like a good strategy. But it could also put you at risk of forgetting to take an RMD and getting penalized.

That's why your best bet is to plan ahead for RMDs. You can schedule your RMD to come out of your savings in late December if that's what works best for you. But in that case, set that up in advance so you don't get too caught up in the holidays that you forget to deal with it.

Most financial institutions let you set up RMDs in advance or automate them on a schedule that works for you, whether it's a single withdrawal each year, quarterly withdrawals, or monthly withdrawals. Figure out what's optimal for you and get your RMDs set up so you don't risk a penalty that could cost you a lot of your savings.

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