---
title: "What HNW Retirees Get Wrong About Required Minimum Distributions"
source: https://www.perissosprivatewealth.com/insights/hnw-retirees-required-minimum-distributions-mistakes
publisher: Perissos Private Wealth Management
published: 2026-09-12T05:00:00+00:00
updated: 2026-09-12T13:07:45.95079+00:00
topics: required minimum distributions, HNW retiree RMD mistakes, age 73 first RMD timing, qualified charitable distributions, Roth conversion and RMD rules, Oklahoma retirement tax planning
license: Educational content. Cite with attribution. Not personalized financial, tax, or legal advice.
---

# What HNW Retirees Get Wrong About Required Minimum Distributions

## Quick answer

High-net-worth retirees often get required minimum distributions wrong by treating them as a spending rule instead of a tax-timing and cash-flow decision. At age 73, first-year timing, QCD eligibility, Roth conversion limits, account-specific rules, and Medicare premium effects can all materially change the outcome.

## Key takeaways

- For a traditional IRA owner turning 73 in 2026, the first RMD is for 2026, even if it is postponed until April 1, 2027.
- Delaying the first RMD until April 1 does not delay the second RMD, which is still due by December 31 of that same year and can create two taxable distributions in one calendar year.
- Using the IRS Uniform Lifetime Table, a $2 million IRA balance produces an RMD of about $75,472 at age 73 using a 26.5 factor, and $125,000 at age 85 using a 16.0 factor.
- A qualified charitable distribution generally becomes available at age 70½ and can satisfy an RMD while being excluded from income if it is paid directly from the IRA trustee to an eligible charity.
- A missed RMD can trigger a 25% excise tax, reduced to 10% for a qualifying timely correction, and waiver relief may be requested on Form 5329.

# What HNW Retirees Get Wrong About Required Minimum Distributions

*Why withdrawal timing, charitable intent, and future income belong in the same plan*

September 10, 2026

A retiree can have ample cash, modest spending needs, and a large tax bill from retirement accounts. That is the tension behind required minimum distributions. Years of tax-deferred accumulation eventually create withdrawals on a schedule that may have little connection to the household's spending plan.

For high-net-worth households, I would treat the annual RMD calculation as one part of a broader income decision. The important questions are when taxable income arrives, what happens to the money afterward, and which choices remain available before the withdrawal occurs.

## Start with the account and the calendar

For a traditional IRA owner turning 73 in 2026, the first RMD is for 2026. The [IRS first-RMD rules](https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-required-minimum-distributions-rmds) allow postponement until April 1, 2027, but the 2027 RMD is still due by December 31, 2027. That first-year extension can put two distributions into one calendar year. 1 A later deadline should prompt a two-year tax comparison before it becomes the default choice.

Deferral might be useful if next year's other income is substantially lower. It can be costly if the additional withdrawal pushes more income into a higher bracket. The CPA should compare the complete returns under both timing choices, including other income, deductions, and state treatment. Medicare income-related premiums usually look back two tax years, so the effects can arrive after the income itself. 5

Continuing to work does not postpone RMDs from your traditional IRA. A current employer's retirement plan may permit a delay until retirement, subject to its terms and the statutory ownership exception; do not assume an owner-operated business qualifies. Confirm the treatment with the administrator. An old employer's account and a current employer's account also require separate attention. 2

Roth IRAs and designated Roth plan accounts have no lifetime RMD for the owner. Beneficiaries still face distribution requirements. 1 This memo addresses your own accounts; inherited accounts require a separate analysis of the beneficiary and the owner's death date.

## A minimum withdrawal is not a spending target

The usual calculation divides the preceding December 31 balance by an IRS distribution factor. Owners with a sole-beneficiary spouse more than ten years younger use a different table. 2 Figure 1 uses the Uniform Lifetime Table and an assumed $2 million prior-year balance in each independent example.

At age 73, dividing $2 million by 26.5 produces an RMD of about $75,472. At age 85, the 16.0 factor produces $125,000. The intermediate examples are about $81,301 at 75 and $99,010 at 80. 3 These are gross distributions, before tax. They are separate same-balance scenarios, not a forecast that an account stays at $2 million throughout retirement.

The planning implication is that a stable account value can still produce a larger required withdrawal at an older age. Model that possibility alongside pensions, investment income, and the survivor's eventual income needs. Do not let today's manageable RMD stand in for a retirement-long tax projection.

You do not have to spend all the proceeds. After reserving for taxes and near-term needs, surplus cash can remain invested in a taxable account. That preserves investment exposure, but it does not reverse the distribution's tax consequences. Withdrawals from pretax retirement money are generally taxable, with exceptions such as a return of after-tax basis. 1 The household's asset allocation should reflect investments both inside and outside retirement accounts.

 Figure 1. Independent scenarios using the same assumed $2 million prior-December-31 IRA balance and IRS Uniform Lifetime Table. Gross amounts before tax; not an account-value forecast. 

## Coordinate charity and conversions before withdrawing

For someone already giving to charity, a qualified charitable distribution may be useful. Generally, an eligible IRA owner who has reached age 70½ can direct an IRA trustee payment to an eligible charity. A qualifying amount can satisfy an RMD while being excluded from income. An excluded QCD cannot also receive a charitable deduction, and deductible IRA contributions made at age 70½ or later can reduce the exclusion. 3

Before sending funds, confirm the charity, account, annual limit, and documentation. A payment to you followed by a donation is not a QCD. Plan charitable withdrawals before taking the full RMD in cash; giving purely for tax savings reduces money available for personal spending.

Roth conversions address a different decision. Converting pretax IRA assets generally creates taxable income now; the required distribution itself cannot be converted. 4 Moving additional assets to Roth can reduce the balance exposed to future owner RMDs, but the current tax cost needs to earn its place in the plan.

I would compare selective conversions in lower-income years with leaving the funds tax-deferred. Include the conversion tax, available cash to pay it, likely future withdrawals, Medicare effects, and intended beneficiaries. A large conversion in an already high-income year can be a poor fit. Paying tax sooner is not automatically paying less tax overall.

## Make the year-end process explicit

Create an account-by-account schedule of the required amount, withdrawals already completed, planned charitable transfers, and remaining deadlines. Traditional IRA RMDs can generally be aggregated after calculating each account's requirement, but a 401(k) requirement cannot simply be satisfied with an IRA withdrawal. 2 Keep inherited-account obligations separate from this owner-account schedule.

The owner remains responsible for the correct amount even when a custodian supplies a calculation. Taking extra this year does not create an RMD credit for next year. A missed amount can face a 25% excise tax, reduced to 10% for a qualifying timely correction; reasonable-error waiver relief may be available through Form 5329. 6 If a shortfall is discovered, involve the CPA promptly instead of waiting for the next regular withdrawal.

An RMD is a deadline to execute within a plan. It should not dictate spending, investment sales, or charitable giving without considering what the household actually needs.

Our team can coordinate with your CPA and account administrators to compare withdrawal timing, charitable distributions, and conversion opportunities. I would document those choices early enough that the final months of the year are about carrying out a decision already made.

All my best,

Brandon VanLandingham, CFA, CMT, CFP Founder / CIO

 

## Related Reading

[Building a Retirement Paycheck: How HNW Retirees Get Paid Monthly](/insights/building-retirement-paycheck-hnw-retirees)

[Backdoor Roth IRA: Avoiding the Pro-Rata Trap](/insights/backdoor-roth-ira-pro-rata-trap-guide)

[Medicare IRMAA: How to Avoid the 'Tax' on High-Income Retirees](/insights/medicare-irmaa-high-income-retiree-strategies)

[Qualified Charitable Distributions (QCDs): A Powerful RMD Strategy](/insights/qualified-charitable-distributions-rmd-strategy)

 

## Citations

 

- IRS, Retirement topics: Required minimum distributions. https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-required-minimum-distributions-rmds (accessed September 10, 2026).

- IRS, RMD comparison chart: IRAs vs. defined contribution plans. https://www.irs.gov/retirement-plans/rmd-comparison-chart-iras-vs-defined-contribution-plans (accessed September 10, 2026).

- IRS, Publication 590-B (2025), Table III and qualified charitable distributions. https://www.irs.gov/publications/p590b (accessed September 10, 2026).

- IRS, Publication 590-A (2025), Converting from any traditional IRA into a Roth IRA. https://www.irs.gov/publications/p590a (accessed September 10, 2026).

- SSA, Handbook section 2504: Medicare income-related adjustment determination. https://www.ssa.gov/OP_Home/handbook/handbook.25/handbook-2504.html (accessed September 10, 2026).

- IRS, Retirement plan and IRA required minimum distributions FAQs. https://www.irs.gov/retirement-plans/retirement-plan-and-ira-required-minimum-distributions-faqs (accessed September 10, 2026).

## Important Disclosures

 

This piece is educational. It is not legal, tax, or accounting advice and is not a recommendation to take or refrain from any specific action. Tax law is fact-specific and changes regularly. Please coordinate any decisions discussed here with your attorney, your CPA, and Perissos before acting.

Perissos Private Wealth Management is a Registered Investment Adviser ("RIA"). Registration as an investment adviser does not imply a certain level of skill or training, and the content of this communication has not been approved or verified by the United States Securities and Exchange Commission or by any state securities authority. Perissos Private Wealth Management renders individualized investment advice to persons in a particular state only after complying with the state's regulatory requirements, or pursuant to an applicable state exemption or exclusion. All investments carry risk, and no investment strategy can guarantee a profit or protect from loss of capital. Past performance is not indicative of future results.

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## Frequently asked questions

### Can delaying a first RMD until April 1 reduce taxes?

Sometimes, but delaying a first RMD can cause both the prior-year and current-year RMDs to land in the same calendar year. That may increase taxable income and can also affect Medicare premium surcharges.

### Do retirees have to spend their required minimum distributions?

No. An RMD is a withdrawal requirement, not a spending target, so surplus proceeds can remain invested in a taxable account after taxes and near-term cash needs are addressed.

### Can a qualified charitable distribution count toward an RMD?

Yes, if the IRA owner is age 70½ or older and the transfer goes directly from the IRA trustee to an eligible charity. A distribution paid to the owner first does not qualify as a QCD.

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Source: [Perissos Private Wealth Management](https://www.perissosprivatewealth.com/insights/hnw-retirees-required-minimum-distributions-mistakes) — fee-only fiduciary wealth management in Bethany, Oklahoma. 405.212.9690.

This article is educational and is not personalized financial, tax, legal, or investment advice.