Required Minimum Distributions (RMDs): What NJ Retirees Need to Know in 2026

If you have a traditional IRA, 401(k), or similar retirement account, the IRS eventually requires you to start withdrawing from it whether you need the money or not. These withdrawals are called Required Minimum Distributions, or RMDs, and the rules around them have changed more than once in the last few years. Getting the timing wrong can mean a real penalty. Getting the strategy right can meaningfully lower what you owe in taxes.

Key Takeaways

• Your RMD start age depends on your birth year: 73 for those born 1951 through 1959, and 75 for those born in 1960 or later.
• Missing an RMD now carries a 25% penalty on the shortfall, down from 50% under prior law, and it can drop to 10% if you correct it quickly.
• Qualified Charitable Distributions let account owners 70½ and older send up to $111,000 directly from an IRA to charity in 2026, and that amount can count toward your RMD.
• Inherited IRAs generally have to be fully distributed within 10 years, with annual withdrawals required in some cases along the way.
• New Jersey taxes retirement account withdrawals differently than the federal government does, which is one more reason to plan RMD timing with your full tax picture in mind.
  

When Do Your RMDs Actually Start?

The SECURE 2.0 Act raised the RMD starting age in stages. If you were born between 1951 and 1959, your RMDs begin at age 73. If you were born in 1960 or later, that age moves to 75. If you turn 73 in 2026, you have some flexibility on your very first withdrawal. You can take it by December 31, 2026, or wait until April 1, 2027. Waiting has a catch, though: you'd then owe a second RMD by the end of that same year, which means two taxable withdrawals landing in one tax year.

How Much You're Required to Withdraw

Your RMD amount (see /rmd-planning) is based on your retirement account balance as of December 31 of the prior year, divided by a life-expectancy factor the IRS publishes in its RMD tables. The exact factor depends on your age and, in some cases, your spouse's age. Because the calculation is specific to your accounts and your beneficiary situation, this is one area where running your own numbers with a professional is worth more than a generic formula.

What Happens If You Miss One

The penalty for missing an RMD used to be a steep 50% of the amount you should have withdrawn. Under SECURE 2.0, that penalty dropped to 25%, and it can fall further to 10% if you correct the mistake within two years. You can also request a full waiver for reasonable cause by filing IRS Form 5329. The penalty is real, but it's no longer the account-draining event it once was, which makes it easier to fix an honest mistake without panicking.

Reducing the Tax Hit: Qualified Charitable Distributions

If you're 70½ or older and charitably inclined, a Qualified Charitable Distribution, or QCD, lets you transfer money directly from your IRA to a qualifying charity, and that amount can count toward your RMD for the year. For 2026, the IRS raised the limit to $111,000 per person, or $222,000 for a married couple with separate IRAs, since this cap is now adjusted for inflation every year. The trade-off to know about: the transfer has to go directly from your IRA custodian to the charity, since money that passes through your hands first doesn't qualify, and a QCD isn't also claimed as a separate charitable deduction, because the benefit is that it's excluded from your taxable income in the first place

If You've Inherited an IRA

Rules for inherited IRAs depend heavily on your relationship to the original owner and when they passed away. For most non-spouse beneficiaries who inherited an account after 2019, the IRS's 10-year rule requires the account to be fully emptied by the end of the tenth year after the owner's death. If the original owner had already started taking RMDs before they died, beneficiaries generally need to take annual withdrawals in years one through nine too, not just a lump sum at the end. Spouses have more flexibility, including the option to roll an inherited account into their own IRA. Because these rules interact with estate planning decisions made well before anyone inherits anything, it's worth revisiting both together rather than treating them as separate questions.

The New Jersey Piece

RMDs are a federal requirement, but what you owe in taxes on them depends on where you live too. New Jersey treats retirement account withdrawals differently than the IRS does, and your state tax picture can change how you'd want to sequence withdrawals, Roth conversions, or charitable giving. This is worth looking at alongside your broader tax planning and your New Jersey retirement plan, not as an afterthought once the RMD notice arrives.

Where This Fits Into Your Bigger Retirement Picture

RMDs don't exist in isolation. They interact with your Roth conversion decisions, your Social Security timing, and your overall retirement income plan (/retirement-income-planning). The right approach for you depends on your account balances, your other income sources, and your goals for what happens to what's left. That's exactly the kind of planning a second set of eyes helps with, especially in the years right before your first RMD is due.

If you're approaching 73, or you've inherited an account and aren't sure what the rules require of you, book your retirement review and we'll walk through your specific situation together.

Leonard Financial Solutions offers retirement planning, tax strategy and Medicare coordination. Insurance and annuity products are offered through Leonard Financial Solutions. Products and services described on this website may not be available in all states. Not all services are advisory services. Consult a qualified professional for advice specific to your situation.