Major Changes in IRA and 401(k) Distribution Rules

Matthew Allgood |

At Allgood Financial, our mission is to help you “do all good things” by engaging deeply in your financial planning journey and building meaningful relationships that last for generations. Your financial security is our business, and that means keeping you up-to-date on major retirement planning rules that could impact your long-term goals. 

In recent years, retirement account distribution rules—especially for IRAs and 401(k)s—have changed significantly. Whether you’re planning when to take your first withdrawal, thinking about inherited accounts, or preparing your retirement income strategy, understanding these updates is essential. Below, we break down the most important rule changes in 2024–2026 and what they mean for you. 

The Rising Age for Required Minimum Distributions (RMDs) 

One of the biggest shifts in retirement distribution rules has been the gradual increase in the age at which you must start taking Required Minimum Distributions (RMDs) from your retirement accounts. Traditionally, RMDs began at age 70½. But under the SECURE 2.0 Act, these ages have moved higher: 

  • Age 73 remains the RMD starting age for most people today (applicable if you turn 73 before 2033).
  • Age 75 is slated to become the new starting age for future retirees (those born after 2032). 

These changes allow your money to grow tax-deferred longer, giving you more flexibility in your retirement income planning. They apply to traditional IRAs, SEP and SIMPLE IRAs, and most 401(k) plans. 

Tip: If you turn 73 in 2026, your first RMD must be taken by April 1, 2027, and subsequent RMDs by December 31 each year thereafter. (Source: IRS) 

RMD Timing and Penalty Changes 

Another important update is how RMD deadlines and penalties work: 

  • The April 1 deadline for your first year RMD still exists, but if you delay until the following year it could affect your tax situation because you may be taxed in two different years.
  • Penalties for missing an RMD have been reduced. The IRS now generally imposes a 25% penalty (and as low as 10% if corrective steps are taken promptly) on the amount not withdrawn. 

Failing to take your RMD can be costly, and many retirees overlook this requirement. A recent Vanguard analysis estimated that missed RMDs may be costing Americans billions in unnecessary penalties each year. 

Roth 401(k) Treatment Has Changed 

Previously, designated Roth accounts in employer plans—like Roth 401(k)s—were subject to RMDs even though Roth IRAs weren’t. That changed: 

  • Roth 401(k) RMDs have been eliminated, effective 2024 and later years. This aligns Roth 401(k)s with Roth IRAs and allows this money to continue growing tax-free during your lifetime.
  • Employers can now make Roth matching contributions directly to Roth 401(k)s, potentially enhancing your tax-free retirement savings. 

This gives Roth-savvy investors even more flexibility when planning distributions. 

Inherited Account Distribution Rules 

If you inherit an IRA or 401(k), the rules have shifted significantly in recent years: 

  • The “stretch IRA,” where beneficiaries could take distributions over their lifetime, has mostly been replaced by the 10-year rule. This means beneficiaries must fully distribute the inherited account within 10 years of the original owner’s death.
  • Recent clarifications require annual distributions during that 10-year period if the original owner had already begun RMDs before passing.
  • Roth IRAs inherited by non-spouse beneficiaries are subject to the 10-year rule even though Roth originals don’t require RMDs during an owner’s lifetime. 

These inherited account rules make planning with beneficiaries more important than ever. 

Catch-Up Contributions and Other Changes 

While this post focuses on distribution rules, it’s worth noting some related retirement planning updates that affect how much you can save before you take distributions: 

  • Super catch-up contributions for ages 60–63 allow higher 401(k) catch-up limits: up to $11,250 in 2025 and beyond if your plan allows it.
  • Contribution limits for 401(k)s and IRAs continue to be indexed for inflation (e.g., $24,500 for 401(k) plans in 2026 and $7,500 for IRAs), increasing your ability to save before distributions begin. 

These changes reflect broader efforts to help Americans save more while planning for retirement distributions. 

Planning in the Nashville Area 

If you’re near Nashville or anywhere in Tennessee and preparing for retirement, these important changes could impact when and how much you withdraw from your retirement accounts. 

Getting personalized guidance is key—not just to meet IRS rules, but to optimize your tax situation, income planning, and legacy goals. At Allgood Financial, we specialize in helping clients like you navigate these transitions with confidence. 

Whether your focus is minimizing taxes, strategic Roth conversions, RMD timing, or beneficiary planning, we’re here to help you make smart decisions that last for generations. 

Sources & Further Reading 

For authoritative details on these distribution rules, check out: 

  • IRS Required Minimum Distributions FAQs – IRS.gov: official rules on RMD ages, calculation, and exceptions.
  • IRS Reminder on IRA and 401(k) Withdrawals – IRS news release outlining RMD deadlines and requirements. 

Start Planning Today 

Schedule a personalized retirement planning consultation with Allgood Financial today. Our Nashville-based team will help you understand your options, align your distribution strategy with your long-term goals, and move forward with confidence.