Deciding when to take that first Required Minimum Distribution (RMD) has become more complicated than it used to be. Historically, individuals simply began taking RMDs at age 70½, a uniform rule that ignored longer lifespans and risked emptying portfolios too soon. Congress has since revised the starting ages, a welcome change but also a source of confusion, and some individuals may even qualify for an exception that delays their annual RMD requirement.
Once RMDs begin, how should the withdrawals actually happen? Congress has built in flexibility here too. Aggregation, for example, lets individuals consolidate multiple accounts’ RMDs into a single withdrawal in certain cases. Between the shifting starting ages, available exceptions, and aggregation options, RMDs can now be managed far more strategically than before.
1) Your birth year now determines when RMDs start
Congress has taken a creative approach to easing the RMD burden as life expectancy increases. Beginning with the SECURE Act and subsequent updates, the “trigger” age is now based on birth year rather than a single fixed age:
- Born on or before June 30, 1949: RMD age 70½
- Born July 1, 1949–December 31, 1950: RMD age 72
- Born January 1, 1951–December 31, 1959: RMD age 73
- Born on or after January 1, 1960: RMD age 75
Just as important as the age is the timing. The trigger-year withdrawal isn’t due until April 1 of the following year, while every subsequent RMD is due by December 31.
Consider Joe, whose trigger year is 2026 (he turns 73 that year). He could take his 2026 RMD anytime in 2026 or wait until April 1, 2027, but his 2027 RMD would still be due by year-end. If Joe defers his first-year RMD, he would then need to take two RMDs in 2027.
That’s not automatically “bad,” but it can create real planning tradeoffs. Two distributions in one calendar year may increase taxable income, affect tax brackets, or change the ripple effects tied to income. The key is to treat the first RMD as a planning decision rather than a simple deadline.
2) The still-working exception can delay certain RMDs
One of the most commonly used ways to delay a trigger year is the still-working exception. If someone works beyond their trigger year, RMDs from their current employer’s plan may be deferred until they separate from service.
A few important limitations apply:
- The exception applies only to the current employer’s plan, not a blanket deferral of every RMD.
- It generally only applies to certain plan types, like 401(k)s and 403(b)s, not IRAs.
- The person must still be working (while neither Congress nor the IRS has defined “still working,” many planners assume that any employee classification may qualify, including part-time).
- The person cannot own more than 5% of the company.
- Employment must continue for the entire year. Stopping work on December 31 defeats the purpose, since the full year wasn’t worked.
Think of it like running a marathon and stopping short at the final quarter mile. A whole year’s deferral strategy can unravel in the last stretch.
One useful complementary idea: for plans that accept rollovers, individuals may be able to roll IRAs or old employer plans into their current plan, potentially extending RMD deferral until retirement. Whether this is available (and appropriate) depends on plan rules, investment options, costs, and your overall retirement income approach.
Overall, the still-working exception remains one of the most common ways to push RMDs past the standard required beginning date, but it has details that are worth confirming before you rely on it.
3) Once RMDs begin, “aggregation” can add flexibility
When it’s time to actually take RMDs, the simplest approach is to withdraw each account’s RMD from that same account. But Congress offers more flexibility in certain situations. Aggregation lets individuals withdraw the total RMD from a group of accounts from one.
For example, if IRA accounts A, B, and C carry RMDs of $2,000, $1,500, and $3,000 respectively, the full $6,500 obligation can be satisfied entirely from account A.
A few caveats matter here:
- Traditional IRAs can be aggregated with other traditional IRAs, but not with employer-sponsored plans like 401(k)s or 403(b)s.
- Employer plans generally must be satisfied separately (each plan’s RMD is taken from that plan).
- Inherited IRAs are their own exception and generally cannot be aggregated with other IRAs.
The upside of aggregation is real optionality. If someone doesn’t want to sell a particular asset in one account, they may be able to cover that RMD from another account instead. That can be especially helpful when markets are volatile, when one account holds less liquid investments, or when you’re intentionally shaping how different accounts will be used later.
When in doubt, though, the safest default is straightforward: withdraw each account’s RMD from the account that generated it, unless you’ve confirmed you’re eligible to aggregate.
Putting it together: start date, exceptions, and withdrawal mechanics
Ultimately:
- Birth year determines when RMDs begin.
- Working status can determine whether RMDs from a current employer plan can be delayed.
- Aggregation rules determine how flexibly certain RMDs can be satisfied.
Managing all three well can help you coordinate retirement income needs with tax timing and portfolio decisions over the long run.
If you’re approaching your RMD age (or recently crossed it), it can be worthwhile to map out (1) your first-year timing decision, (2) whether any deferral exceptions may apply, and (3) which accounts are best positioned to fund distributions, based on your overall plan and cash-flow needs. As always, rules can be nuanced, and it’s wise to coordinate with a qualified tax professional when making decisions that affect your tax situation.