What are the tax consequences of taking two RMDs in one year versus spreading distributions across years?
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Executive summary
Delaying the first RMD until April 1 creates a situation in which two required minimum distributions must be taken in the same calendar year — and doing so transforms what would have been two separate taxable events into one larger taxable-income spike for that year, possibly raising tax liability, affecting means‑tested benefits, and limiting planning options (IRS; Vanguard; Kiplinger) [1] [2] [3]. Spreading distributions across two tax years generally smooths taxable income and may avoid pushing a taxpayer into higher tax brackets or triggering extra taxes tied to income, while taking two RMDs in one year can be managed with tools such as qualified charitable distributions or timing conversions — but those tools have rules and tradeoffs (IRS; Fidelity; Vanguard) [4] [5] [2].
1. How two RMDs happen and the mechanics that matter
The IRS lets an individual postpone the very first RMD until April 1 of the year after they reach the required age, which creates two required distributions in that calendar year — the delayed first RMD (due April 1) plus the regularly scheduled RMD by December 31 — and the RMD amount is calculated from year‑end balances and life‑expectancy tables, separately for each IRA or plan if applicable (IRS; FINRA; Investopedia) [1] [6] [7]. Custodians often calculate the numbers, but the taxpayer is responsible for taking the amounts and meeting the deadlines or facing excise taxes [7] [4].
2. Direct tax consequences: two taxable events in one year
Both RMDs are treated as ordinary income when distributed from pre‑tax accounts, so taking two in one year increases that year’s gross taxable income and can push a taxpayer into a higher marginal tax bracket compared with taking one in each of two years (Kiplinger; Vanguard; Investopedia) [3] [2] [7]. Withdrawals above the RMD are also taxable in the year taken, so using the April 1 option without other planning can create “two sizable taxable withdrawals” in the same year for those with large account balances (Investopedia; Kiplinger) [7] [3].
3. Indirect tax and benefit effects that amplify the bite
A concentrated increase in taxable income can have knock‑on consequences: it can raise the taxable portion of Social Security benefits, affect Medicare Part B and Part D income‑related monthly adjustment amounts (IRMAA), and interact with state income taxes — all of which are driven by adjusted gross income or modified AGI — so one front‑loaded year may materially change non‑income tax liabilities or premiums compared with spreading distributions (NYSUT; Vanguard) [8] [2]. The reporting sources note these secondary effects as meaningful considerations for timing RMDs [8] [2].
4. Planning tools and constraints: QCDs, IRAs, Roth conversions
There are legitimate ways to blunt the tax impact: qualified charitable distributions (QCDs) can satisfy an RMD and exclude the donation from taxable income if rules are met, and individuals with multiple IRAs may aggregate RMDs and take the total from one account to simplify execution (Fidelity; Vanguard) [5] [2]. Roth conversions can reduce future RMDs but are themselves taxable events and cannot be used to convert the RMD amount — the RMD must be withdrawn before converting the remainder (Fidelity; FINRA) [5] [6]. These tools require precise timing and often professional advice because each has limits and tax tradeoffs [5] [9].
5. Penalties, corrections and practical risk management
Failing to take the full required amount by the deadline can trigger an excise tax — generally 25% of the shortfall (with potential reduction to 10% if corrected within two years) — so the practical risk of under‑withdrawing while attempting timing maneuvers is significant and part of why many advisors warn against delaying the first RMD solely to defer administrative work (IRS; FINRA; Bankrate) [4] [6] [10]. Custodians and financial publishers uniformly recommend planning: you can always take more than the RMD, consolidate accounts to simplify calculations, or use QCDs to avoid taxable income, but each choice should be weighed against the immediate higher tax bill when two distributions fall into one tax year [5] [11].
6. Bottom line: smoothing usually reduces tax surprises
For most taxpayers, spreading RMDs across two tax years smooths taxable income and reduces the odds of entering a higher marginal bracket or triggering income‑based surcharges; taking two RMDs in a single year concentrates taxable income, often increasing federal (and possibly state) income tax and affecting Social Security and Medicare‑related calculations — though QCDs and strategic conversions offer partial offsets if used correctly. The IRS, fiduciary institutions, and financial media all flag the same tradeoff: the convenience of delaying the first RMD may create a meaningful, and sometimes expensive, tax spike in the year two distributions fall together [1] [3] [2].