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Retirement & Tax Planning8 min read

RMDs in Plain English: What Oklahoma Retirees Need to Know This Year

By Scott Dean, MBA

Mature couple reviewing retirement account paperwork and a laptop together at their kitchen table

If you're approaching your 70s with money sitting in a traditional IRA or old 401(k), you've probably heard the term "RMD" tossed around, usually without much explanation. Required Minimum Distributions sound more complicated than they are. In plain terms, an RMD is the minimum amount the IRS requires you to withdraw each year from most tax-deferred retirement accounts, starting at a certain age, whether you need the money or not.

The rule exists because accounts like traditional IRAs and 401(k)s let your contributions grow without being taxed along the way. The government eventually wants its share. RMDs are the mechanism that forces those deferred taxes to come due, a little at a time, over the rest of your life.

For retirees in Edmond and across the Oklahoma City metro, RMDs intersect with a few state-specific wrinkles worth understanding, including how Oklahoma taxes retirement income differently than many other states. Here's what to know for 2026.

Key takeaways

  • Under the SECURE 2.0 Act, RMDs begin at age 73 if you were born between 1951 and 1959, and at age 75 if you were born in 1960 or later.
  • Your RMD amount is calculated by dividing your prior year-end account balance by an IRS life expectancy factor, not by guesswork.
  • Roth IRAs are not subject to RMDs during the original owner's lifetime.
  • Missing an RMD triggers an excise tax, though it can be reduced if corrected promptly (generally within two years).
  • Oklahoma offers a retirement income exclusion that can soften the state tax impact of your RMD.

What an RMD is, and why it exists

Traditional IRAs, 401(k)s, 403(b)s, and similar accounts are funded with pre-tax dollars. You got a deduction (or your employer did) when the money went in, and it has grown tax-deferred ever since. RMDs are the IRS's way of making sure that deferral doesn't last forever. Once you reach your required beginning date, you must withdraw at least a minimum amount annually, and that withdrawal is taxed as ordinary income.

When your RMDs begin

Under the SECURE 2.0 Act, your RMD starting age depends on your birth year: age 73 if you were born between 1951 and 1959, and age 75 if you were born in 1960 or later.

Your very first RMD has a bit of flexibility: you can delay it until April 1 of the year after you reach your RMD age, though doing so means you'll take two RMDs in that second year, which can bump you into a higher tax bracket. Every RMD after that first one is due by December 31.

If you're still working and don't own more than 5% of the company, you can generally delay RMDs from your current employer's plan until April 1 of the year after you retire, if the plan allows it. This exception doesn't apply to IRAs or to plans from former employers.

Because the exact starting age depends on your birth year, it's worth confirming your personal required beginning date rather than assuming. The IRS RMD overview is a good starting reference, and your advisor or tax preparer can pinpoint the date based on your birthday.

How the RMD amount is calculated

The math itself is straightforward once you have the two inputs. Take your account balance as of December 31 of the prior year, then divide it by a life expectancy factor from the IRS Uniform Lifetime Table (a different table applies if your spouse is more than ten years younger and is your sole beneficiary). The result is your minimum required withdrawal for that account for the year.

If you hold multiple traditional IRAs, you calculate the RMD for each one separately but can withdraw the combined total from any single IRA or combination of them. The same aggregation rule applies among 403(b) accounts, but inherited IRAs can't be combined with your own. Workplace plans like 401(k)s generally need to be satisfied individually, account by account.

Which accounts are affected (and which aren't)

RMDs apply to traditional IRAs, SEP IRAs, SIMPLE IRAs, 401(k)s, 403(b)s, and 457(b) plans. Roth IRAs are the notable exception: the original owner never has to take an RMD from a Roth IRA during their lifetime. Thanks to SECURE 2.0, designated Roth accounts inside workplace plans, like a Roth 401(k), are also no longer subject to lifetime RMDs starting in 2024.

What happens if you miss one

The penalty for not taking a full RMD on time is an excise tax of 25% of the amount that should have been withdrawn. That penalty can drop to 10% if the shortfall is corrected within the IRS correction window (generally two years). It's a meaningful cost, but it's also avoidable with a bit of planning, which is one reason many retirees set up automatic annual withdrawals rather than relying on memory.

Oklahoma taxes and your RMD

Your RMD is federally taxable as ordinary income, and Oklahoma generally follows suit for state income tax purposes, with one helpful exception. Oklahoma allows a retirement income exclusion of up to $10,000 per person, per year, on qualifying retirement income, which can reduce the state tax bite on part of your distribution. This exclusion applies per individual, so a married couple filing jointly may be able to exclude up to $20,000 combined if each spouse has qualifying retirement income in his or her own name. The exclusion can't exceed the amount of qualifying retirement income included in your federal adjusted gross income, and early distributions tied to leaving a job before actual retirement or disability don't qualify.

It's also worth knowing that Oklahoma does not tax Social Security benefits at all, which is a separate but related piece of the retirement income picture many of our clients ask about. Because exclusion rules and qualifying income definitions can be specific, it's worth confirming current details with the Oklahoma Tax Commission or your tax preparer before you file.

Using a QCD to satisfy your RMD tax-efficiently

If you're age 70½ or older and charitably inclined, a Qualified Charitable Distribution, or QCD, lets you send some or all of your RMD directly from your IRA to a qualifying charity. You can begin making QCDs at 70½, even before your RMDs start. The amount sent as a QCD counts toward your RMD but is excluded from your taxable income, which can be especially valuable if you take the standard deduction, since a QCD excludes the gift from income entirely rather than relying on a limited deduction. There's an annual limit on QCDs, and the rules around eligible accounts and charities are specific, so this is a strategy worth discussing with your advisor before year-end.

Common mistakes to avoid

  • Waiting until December to figure it out. Account custodians get busy at year-end, and errors are more likely under time pressure.
  • Forgetting an old 401(k) from a prior employer. It's still subject to RMDs even if you haven't thought about it in years.
  • Assuming one withdrawal covers every account. IRAs can be aggregated, but most workplace plans cannot.
  • Not accounting for the tax impact. A large RMD can increase how much of your Social Security is federally taxable, push capital gains into a higher rate tier, and raise your Medicare premiums through IRMAA surcharges.
  • Overlooking Oklahoma's exclusion. Missing this on your state return can mean paying more state tax than necessary.

When to talk with us

RMDs touch federal tax, state tax, charitable planning, and overall retirement income strategy all at once, which makes them easy to get slightly wrong even with good intentions. If you're approaching your required beginning date, already taking RMDs, or simply want a second look at how this fits your broader plan, it may help to schedule a call with us for an introductory consultation. We'll walk through your specific accounts and timeline together.

Frequently asked questions

Do I have to take an RMD from a Roth IRA? No. Roth IRA owners are not required to take distributions during their lifetime. This is one of the key advantages of Roth accounts for retirement and legacy planning.

What if I have accounts at several different custodians? For IRAs, you can calculate each account's RMD separately and then withdraw the total from any one IRA or a combination of them. Workplace plans typically need to be handled individually.

Can I use my RMD to give to charity instead of taking the cash? Yes, if you meet the eligibility requirements, through a Qualified Charitable Distribution. The amount counts toward your RMD but isn't included in your taxable income, which can be a meaningful tax advantage.

Does Oklahoma tax my RMD the same way the federal government does? Generally yes, but Oklahoma allows a retirement income exclusion of up to $10,000 per person that can reduce the state tax owed on qualifying retirement income, including RMDs.

What happens if I simply forget to take my RMD one year? You'll owe an excise tax on the shortfall, 25% of the amount not withdrawn, reduced to 10% if you correct it within the IRS correction window, generally two years. It's best to set a reminder or automate the withdrawal to avoid this.

Sources

This article is for general educational purposes only and does not constitute personalized tax, legal, or investment advice. Rules around RMDs, QCDs, and Oklahoma tax exclusions can change and may affect each individual differently. Please consult with a qualified tax professional and your financial advisor before making decisions about your specific situation.

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