Jeremy Keil explains the 5 RMD (Required Minimum Distribution) mistakes in Retirement and how to avoid them.

A retiree recently called for help.

It was their first year taking Required Minimum Distributions. They had delayed their first RMD until April of the following year — which meant taking two distributions in one tax year. That part was allowed. In some cases, it can even be strategic.

But when they called their IRA custodian and asked, “How much should I withhold for taxes?” they were given the default answer: 10% federal withholding.

They assumed that must be right.

It wasn’t.

They ended up short on taxes by more than $10,000 — and owed penalties on top of that.

That situation wasn’t caused by breaking a rule.

It was caused by following the rule without a plan.

And that’s where most RMD mistakes begin.

I recently wrote an article for Kiplinger magazine titled “5 RMD Mistakes That Could Cost You Big-Time: Even Seasoned Retirees Slip Up” and for this week’s episode of the “Retire Today” podcast I decided to talk through each of these mistakes in detail.

Mistake #1: Waiting Until Age 73 to Create a Plan

Turning 73 is not a strategy.

If you wait until the government forces your first RMD to think about it, you’ve already missed years of opportunity. The window between retirement and RMD age is often the most flexible tax-planning period of your life.

In those years, you may have:

Lower earned income
No required withdrawals yet
Control over when and how you take distributions

That’s prime territory for intentional tax planning. Once RMDs begin, you’ve lost some flexibility.

In the KEEP step of the Retirement Master Plan, tax timing matters. RMDs don’t happen in isolation. They interact with Social Security, pensions, and brokerage income. Planning ahead—sometimes a decade ahead—can dramatically change the long-term outcome.

Mistake #2: Failing to Make Use of Qualified Charitable Distributions (QCDs)

This one surprises me every year.

RMDs currently begin at age 73 (moving to 75 for those born in 1960 or later). But Qualified Charitable Distributions still start at 70½.

That means you can send money directly from your IRA to a charity before RMDs even begin.

Why does that matter?

Because a QCD:

Reduces your IRA balance (lowering future RMDs)
Keeps the distribution out of your taxable income
May help limit Social Security taxation
May help reduce Medicare premium surcharges

Many retirees continue writing checks to charities from their checking account, hoping for a deduction. With today’s larger standard deduction, many people don’t itemize at all.

Going directly from IRA to charity is often more tax-efficient—and sometimes dramatically so.

If charitable giving is already part of your plan, the tax strategy should be part of it too.

Mistake #3: Doing the Wrong Tax Withholding

When retirees call their custodian to take their RMD, they’re often asked:

“How much would you like withheld for taxes?”

The default federal withholding is often 10% for IRAs and 20% for 401(k)s. Many people assume, “That must be right.”

It often isn’t.

I recently saw a retiree who delayed their first RMD until April of the following year—which meant taking two distributions in one year. They defaulted to 10% withholding.

They ended up underpaying taxes by more than $10,000 and owed penalties.

The custodian can’t provide tax planning. That’s not their role.

Before taking an RMD, you need to project:

What tax bracket you’ll land in
Whether additional withholding is necessary
How this affects your overall estimated payments

Again, this falls under the KEEP step. Don’t let the default settings dictate your tax bill.

Mistake #4: Not Realizing How Your RMD Income Affects the Rest of Your Tax Return

RMDs don’t just increase taxable income.

They can:

Make more of your Social Security taxable
Push capital gains from 0% into taxable territory
Trigger Medicare IRMAA surcharges

Many retirees focus only on their marginal bracket. But the real issue is tax cost, not tax bracket.

An extra $20,000 RMD might not just be taxed at 22%. It could cascade into additional taxation elsewhere.

That’s why projections matter. You don’t want to discover these ripple effects after the fact.

Mistake #5: Forgetting That the M in RMD means ‘Minimum,’ not ‘Maximum’

The M in RMD stands for minimum.

It does not mean that’s the only amount you’re allowed to withdraw.

You can:

Withdraw more than your RMD
Complete Roth conversions after satisfying the RMD
Send more than your RMD amount to charity (subject to QCD limits)

Sometimes taking more than the minimum makes sense—especially if it smooths taxes over multiple years.

RMDs are a rule. They are not a retirement strategy.

The Bigger Lesson

RMDs are not just a government requirement. They are a planning opportunity—or a planning hazard.

They affect your income plan (MAKE), your spending plan (SPEND), your tax strategy (KEEP), and even what you ultimately LEAVE behind.

The biggest mistake isn’t misunderstanding a rule.

It’s treating RMDs as an isolated event instead of part of a coordinated retirement master plan.

Because in retirement, small tax decisions compound just like investment returns may do.

And when handled intentionally, RMDs don’t have to derail anything at all.

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About the Author:

Jeremy Keil, CFP^®, CFA is a retirement financial advisor with Keil Financial Partners, author of Retire Today: Create Your Retirement Income Plan in 5 Simple Steps, and host of the Retirement Today blog and podcast, as well as the Mr. Retirement YouTube channel.

Jeremy is a contributor to Kiplinger and is frequently cited in publications like the Wall Street Journal and New York Times.

Additional Links:

– Buy Jeremy’s book – Retire Today: Create Your Retirement Master Plan in 5 Simple Steps

– “5 RMD Mistakes That Could Cost You Big-Time: Even Seasoned Retirees Slip Up” by Jeremy Keil, Kiplinger Magazine – https://www.kiplinger.com/retirement/required-minimum-distributions-rmds/rmd-mistakes-that-even-seasoned-retirees-can-make

– Create Your Retirement Master Plan in 5 Simple Steps – 5StepRetirementPlan.com

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Media Disclosures:

Disclosures

This media is provided for informational and educational purposes only and does not consider the investment objectives, financial situation, or particular needs of any consumer. Nothing in this program should be construed as investment, legal, or tax advice, nor as a recommendation to bu...