Hey everyone, Michael Garcia here from ProTaxMasters.

It is May 2026, and if you’re kicking back after a weekend camping at one of the Texas State Parks like I am today, you know spring is finally starting to show up: but the tax deadline may be behind us, while retirement-account compliance questions are still very much front and center. For my retirees and those of you supporting aging parents, this time of year often brings a specific kind of stress: the arrival of the Form 1099-R and the nagging question, "Did I take out enough money from my IRA so the IRS doesn't come after me?"

I’ve seen a lot of confusion lately regarding Required Minimum Distributions (RMDs), especially with the sweeping changes brought on by the SECURE 2.0 Act. There is a lot of outdated info floating around out there. Some people still think the penalty for missing an RMD is 50% (ouch!), while others aren't sure if they even need to take one yet.

Today, I’m going to break down the "Goldilocks" zone of RMDs: not too much, not too little, but just right: so you can keep your hard-earned retirement savings where they belong: in your pocket.

What Exactly is a 1099-R?

Before we dive into the "how much," let’s talk about the "what." Form 1099-R is the document your financial institution sends you (and the IRS) to report distributions from annuities, profit-sharing plans, IRAs, or pensions.

Think of the 1099-R as the "tattletale" form. If you took money out of your retirement account in 2025, the IRS already knows about it because they’ve received a copy of this form. When you sit down with us at ProTaxMasters, the first thing we look at is the "Distribution Code" in Box 7. This little code tells us if the money you took out was a normal distribution, an early withdrawal (with a penalty), or perhaps a rollover into another account.

If you haven't gathered your forms yet, I highly recommend checking out your quick start guide to tax preparation services to make sure nothing slips through the cracks.

The 2026 RMD Landscape: Who Must Withdraw?

Under the SECURE 2.0 Act, the age at which you must start taking RMDs has shifted. As we sit here in 2026, the current rule is that you must begin taking RMDs starting at age 73.

If you turned 73 in 2025, you actually have until April 1, 2026, to take your very first distribution. If you’re reading this on March 24th and haven't taken that first check yet, you have exactly one week left. Don’t wait until the 31st; banks need time to process these requests!

Here is a quick breakdown of the accounts that require RMDs:

1. Traditional IRAs
2. SEP IRAs
3. SIMPLE IRAs
4. 401(k), 403(b), and 457(b) plans

Pro Tip: Roth IRAs do not require RMDs during the original owner’s lifetime. This is one of the biggest advantages of the Roth: you can let that money grow tax-free for as long as you live. However, if you inherited an IRA, the rules change significantly, and you should definitely consult our insights to avoid a major tax bill.

The 25% Penalty: A "Gift" from SECURE 2.0?

I say "gift" sarcastically, of course. For years, the penalty for failing to take your RMD was a staggering 50% of the amount you failed to withdraw. It was arguably the most aggressive penalty in the entire tax code.

Thankfully, the law changed. For the 2025 tax year (the one we are filing right now in 2026), the penalty has been reduced to 25%.

But wait, there’s more! If you realize you made a mistake and correct it within a "correction window" (usually by the end of the second year after the year the tax is imposed), that penalty can be further reduced to 10%.

While 10% is better than 50%, it’s still money down the drain. If your RMD was supposed to be $20,000 and you forgot to take it, you’re looking at a $5,000 penalty. I don't know about you, but I can think of a lot of better things to do with five grand in Chicago than handing it to the Treasury.

How to Calculate Your RMD (The Math Part)

I promise I’ll keep this simple. The IRS doesn't just pick a number out of a hat. Your RMD is calculated by taking your account balance as of December 31st of the previous year and dividing it by a "distribution period" found in the IRS Life Expectancy Tables.

Most people use the Uniform Lifetime Table. For example, if you are 75 years old, your "divisor" might be 24.6. If you had $500,000 in your IRA on December 31, 2024, you’d divide $500,000 by 24.6 to get an RMD of approximately $20,325.

If your spouse is more than 10 years younger than you and is your sole beneficiary, you get to use a different table that allows you to take out even less. This is where things get technical, and where a professional eye can save you a lot of money. You can view our pricing for 2026 services if you want us to handle these calculations for you.

Smart Strategies to Manage Your RMDs

Taking an RMD increases your taxable income, which can sometimes push you into a higher tax bracket or increase the cost of your Medicare premiums (the dreaded IRMAA surcharges). Here are two ways we help our clients at ProTaxMasters manage the impact:

1. The Qualified Charitable Distribution (QCD)

If you don’t actually need the RMD money to live on and you’re feeling charitable, the QCD is your best friend. You can direct your IRA custodian to send up to $105,000 (for 2025/2026) directly to a qualified 501(c)(3) charity.

• The Benefit: The money counts toward your RMD, but it never shows up as taxable income on your return. It’s a win-win.

2. Strategic Withholding

When you receive your 1099-R, you’ll notice a box for "Federal income tax withheld." Many retirees forget to withhold taxes from their RMDs, leading to a nasty surprise when they file. We can help you calculate exactly how much to withhold so you don't end up owing the IRS a giant lump sum in April.

What if I Missed My Deadline?

Don't panic. If you realize today that you missed your 2025 RMD, the best course of action is to:

1. Withdraw the funds immediately.
2. File Form 5329 with your tax return.
3. Attach a "Letter of Reasonable Cause."

The IRS is surprisingly lenient if you show that the mistake was an honest error and that you took steps to fix it as soon as you realized it. We’ve helped many clients successfully waive these penalties by documenting the situation correctly.

Let’s Get Your Retirement Taxes Sorted

RMDs and 1099-Rs are just one piece of the puzzle. Whether you're navigating the complexity of SECURE 2.0 or just trying to make sure you're getting every deduction you deserve, we are here to help. At ProTaxMasters, we pride ourselves on giving you that "Goldilocks" service: technical expertise delivered in a way that actually makes sense.

If you’re ready to stop worrying about penalties and start enjoying your retirement, book a consultation with us today. You can also read what our clients think of our work on our testimonials page.

Stay warm, stay compliant, and let’s get those taxes finished!

: Michael Garcia
Owner, ProTaxMasters

Professional Disclaimer

This article is for informational purposes only and is not intended as tax, legal, or accounting advice. Tax laws and regulations—including 1099 thresholds, bonus depreciation rules, BOI reporting requirements, and IRS penalty amounts—are subject to frequent change. As of May 2026, under FinCEN’s current 2026 BOI reporting framework, domestic entities created in the United States are exempt from BOI reporting, while certain foreign-formed companies registered to do business in the United States may still have BOI filing obligations. For the latest BOI updates and filing requirements, visit fincen.gov/boi. Bonus depreciation for the 2026 tax year is 100% and is not subject to a phase-out schedule under the One Big Beautiful Bill Act (Public Law 119-21), provided the property otherwise meets applicable legal requirements. For reference, the minimum Failure to File penalty for a return that is more than 60 days late is $525.00 for returns due after 12/31/2025 (TY 2026), $510.00 for returns due 01/01/2025 through 12/31/2025 (TY 2025), and $485.00 for returns due 01/01/2024 through 12/31/2024 (TY 2024), or 100% of the tax required to be shown on the return, whichever is less. This content is current as of May 2026 but may be superseded by new legislation, Treasury guidance, FinCEN updates, court rulings, or IRS guidance.

IRS Circular 230 Notice: Any U.S. federal tax information contained in this article is not intended or written to be used, and cannot be used, for the purpose of avoiding penalties under the Internal Revenue Code or promoting, marketing, or recommending any tax-related matter to another party.

Reading this article does not create a professional-client relationship. Because every situation is unique, you should not rely on this information without consulting a qualified professional. For guidance tailored to your specific facts and circumstances, please contact ProTaxMasters.