Taxes on a required minimum distribution are due during the year you take the money, not just when you file the following April. The federal system runs on pay-as-you-go, so a large RMD sitting untaxed until tax day can trigger an underpayment penalty even if you eventually pay in full. You have two ways to stay current: have your IRA or 401(k) custodian withhold federal tax straight from the distribution, or send quarterly estimated payments to the IRS yourself. Most retirees are better off using withholding, and the reason is a timing rule that quietly makes December the most powerful month of the year.
Withholding From the Distribution
The simplest way to pay is to let your custodian do it. You tell them what percentage of the RMD to send to the IRS, they remit it, and you receive the rest. No vouchers, no calendar to track.
The default federal withholding rate on an IRA distribution is 10%. For most retirees in the 22% or 24% bracket, that default leaves a real shortfall. You can elect any rate from 0% to 100% by filing Form W-4R with your custodian.1Internal Revenue Service. About Form W-4R, Withholding Certificate for Nonperiodic Payments and Eligible Rollover Distributions Periodic pension payments use Form W-4P, but most IRA and 401(k) withdrawals are nonperiodic and go through W-4R.
Here is the timing rule that matters. The IRS treats all withholding as if it were paid in four equal installments across the year, no matter when the money actually came out.2Internal Revenue Service. Pay As You Go, So You Won’t Owe Take your entire RMD in December, withhold 100% of the expected tax, and the IRS credits a quarter of it to each period as if you had been paying steadily since January. That single rule is why withholding is the right first tool for most retirees, and why a year-end withholding bump can erase an underpayment that estimated payments alone cannot repair.
Quarterly Estimated Tax Payments
If you’d rather receive the full RMD and settle the tax yourself, or if withholding won’t cover your whole bill, use Form 1040-ES to make estimated payments on the IRS schedule:3Internal Revenue Service. When to Pay Estimated Tax
- April 15, for income received January through March
- June 15, for April through May
- September 15, for June through August
- January 15 of the following year, for September through December
When a deadline lands on a weekend or federal holiday, it moves to the next business day. Estimated payments credit only to the quarter in which you pay them. A large fourth-quarter payment covers the fourth quarter, not the year.
Safe Harbor
You avoid an underpayment penalty if your total payments, withholding and estimateds combined, meet the smaller of 90% of your current-year tax or 100% of last year’s tax. If your prior-year adjusted gross income was over $150,000 ($75,000 if married filing separately), that second figure rises to 110% of last year’s tax.4Internal Revenue Service. Underpayment of Estimated Tax by Individuals Penalty There is also a floor: if your total tax due after withholding and credits is under $1,000, no penalty applies.5Internal Revenue Service. Estimated Tax
Annualized Income Method for Late-Year RMDs
If you take your RMD in the fourth quarter and pay the tax then, the standard schedule can still charge you a penalty for the earlier quarters, when the IRS assumes income was arriving evenly. The annualized income installment method fixes that. It lets you calculate each quarter’s required payment based on the income you had actually received by that point. You elect it by checking box C on Form 2210 and completing Schedule AI.6Internal Revenue Service. Instructions for Form 2210 The arithmetic is tedious, but it can eliminate a penalty tied to quarters when you had no RMD income at all.
The First-Year Deferral Trap
The year you first reach RMD age, you get a one-time option to delay your initial distribution until April 1 of the following year.7Internal Revenue Service. Retirement Plan and IRA Required Minimum Distributions FAQs The catch is that your second RMD is still due by December 31 of that same year. Defer the first, and two full RMDs land in one tax year, which can push you into a higher bracket, raise Medicare premiums, and pull more of your Social Security into taxation. For most retirees, taking the first RMD in the year you turn 73 is the cleaner move. The April 1 delay pays off only in an unusually low-income year that can absorb the doubled income the next year.
RMDs generally begin the year you turn 73. If you were born in 1960 or later, the starting age is 75. Roth IRAs have no lifetime RMDs, and designated Roth 401(k) and 403(b) accounts joined that exemption starting in 2024,7Internal Revenue Service. Retirement Plan and IRA Required Minimum Distributions FAQs so if all your retirement savings sit in Roth accounts, none of this timing applies to you.
Shrinking the Tax With a Qualified Charitable Distribution
If you’re 70½ or older and already give to charity, a qualified charitable distribution sends up to $111,000 per year directly from your IRA to an eligible charity. The amount satisfies your RMD but never appears as taxable income on your return.8Internal Revenue Service. Publication 526 – Charitable Contributions Because it stays out of your adjusted gross income, it also avoids the downstream effects that ride on that number.
The mechanics are strict. The transfer must go directly from the IRA custodian to the charity. If the money touches your account first, it’s a taxable distribution, no matter what you do with it after. On Form 1040, report the total distribution on line 4a, enter the non-QCD portion (or zero) as taxable on line 4b, and check the box on line 4c.9Internal Revenue Service. Instructions for Form 1040 and 1040-SR (2025) QCDs come from IRAs only. Employer plans like 401(k)s and 403(b)s don’t qualify directly, though you could roll those funds into an IRA first.
Penalties You’re Trying to Avoid
Three penalties can hit an RMD, and they punish different mistakes.
Underpayment of Estimated Tax
If your total withholding and estimateds fall below the safe harbor, the IRS charges interest on the shortfall for the period it was underpaid. The rate is set quarterly. For early 2026 it’s 7%, dropping to 6% in the second quarter.10Internal Revenue Service. Quarterly Interest Rates The penalty compounds for each quarter you were short, which is exactly why year-end withholding, credited evenly across all four quarters, works so well as a fix.
You can request a waiver if you retired after age 62 or became disabled and the underpayment was due to reasonable cause. The IRS may also waive it for casualty, disaster, or other unusual circumstances.11Internal Revenue Service. Instructions for Form 2210 (2025)
Failure to Pay
If a balance is still owed at filing and you don’t pay by April 15, the failure-to-pay penalty runs at 0.5% of the unpaid amount per month, up to 25%. An approved payment plan cuts the rate to 0.25% per month.12Internal Revenue Service. Failure to Pay Penalty
Missing the RMD Entirely
This one is separate from the income tax question, but it’s the most expensive mistake and worth naming. Failing to withdraw the required amount by the deadline carries a 25% excise tax on the shortfall, dropping to 10% if you correct it within two years.7Internal Revenue Service. Retirement Plan and IRA Required Minimum Distributions FAQs If your RMD was $20,000 and you took nothing, that’s a $5,000 excise tax, or $2,000 with prompt correction. Take the distribution on time even if the withholding math isn’t settled. You can always sort the income tax through estimated payments or at filing. Not taking the money out is far worse than paying the tax late.