Suddenly, we are entering the final Quarter of 2026, leaving fewer working days and planning days than most of us can comprehend. Having checked the calendar, I verified that time flies. From a financial planning and taxation standpoint, this means busy times for Strivus Wealth Partners, along with investors and taxpayers everywhere.

Certain lesser-known IRS rules are useful for efficient year-end tax planning. Perhaps the most important of these demands Required Minimum Distributions, or RMDs. These apply to tax-qualified Retirement Accounts, including Individual Retirement Accounts (IRAs), as well as 401(k) Plans (and the other similar employer-sponsored Plans). RMDs are the payback required by the IRS for the many years a taxpayer benefitted from deferring taxes on contributions and account growth.

The Required Beginning Date (RBD) is the date on which RMD rules apply to an account owner. This date depends on the year of birth of the affected taxpayer. For decades, RMDs were required when the account owner achieved age 70-1/2. The actual RBD was April 1 of the following year. This was a 1-time only postponement of the first required withdrawal, and also required a second RMD before the end of the same year.

In 2020, with passage of the SECURE Act 1.0. the RBD was moved to age 72, and otherwise the rules remained the same. SECURE Act 2.0 raised the age from 72 to 73, and everything else stayed the same. In 2033, the RMD age will rise to 75. These changes are meant to acknowledge increasing lifespans of Americans.

Calculating the amount of each RMD is performed according to a formula specified by the IRS, and is always based on the account balance from the prior year-end. RMDs can be made in cash or securities, and are not eligible for conversion to Roth accounts. (Note that Roth accounts are never subjected to RMDs, except when the Roth account is classified as an Inherited Roth, when they are treated the same, except those RMDs will not be taxable.)

Most large asset custodians (we use Schwab) will calculate RMDs for non-inherited IRAs custodied at their firm. However, there is one instance in which this may not be relied upon for the exact calculation. Married account holders whose spouse is more than 10 years younger, and are the sole beneficiary of the account, are allowed to use a different RMD table. Under this alternative, the calculation produces a lesser required withdrawal amount, intended to preserve the account for a longer time span.

We have barely scratched the surface of the year-end planning process. In coming weeks, we will discuss other year-end necessities and possibilities.