Required Minimum Distributions and NC Taxes: What Retirees Need to Know (2026)

Required minimum distributions — RMDs — are mandatory annual withdrawals that the IRS requires you to take from most tax-deferred retirement accounts once you reach a certain age. For many North Carolina retirees, RMDs are the single largest source of taxable income each year, and understanding exactly how they work — and how NC taxes them — is essential to avoiding surprise tax bills and managing your retirement income efficiently.

This guide covers everything NC retirees need to know about RMDs in 2026: which accounts are subject to them, how to calculate them, what NC taxes apply, and the strategies that can legally reduce what you owe.

What Are Required Minimum Distributions?

When you contribute to a traditional IRA, 401(k), 403(b), or similar pre-tax retirement account, the IRS allows you to defer taxes on both the contributions and their growth until you withdraw the money. RMDs are the mechanism Congress uses to eventually collect those deferred taxes. Starting at age 73 in 2026, you must withdraw at least a minimum amount from your tax-deferred accounts each year — and you pay ordinary income tax on those withdrawals whether you need the money or not.

Which Accounts Are Subject to RMDs

RMDs apply to all pre-tax retirement accounts: traditional IRAs (including rollover IRAs), SEP-IRAs, SIMPLE IRAs, 401(k) plans, 403(b) plans, 457(b) plans (governmental), and most other employer-sponsored defined contribution plans. If you have multiple traditional IRAs, you calculate your RMD separately for each account but can satisfy the total by withdrawing from any one or combination of them. For 401(k), 403(b), and other employer plans, you must take each account's RMD from that specific account — you cannot aggregate across different employer plan types the way you can with IRAs. If you are still working at age 73 and are an active participant in your current employer's 401(k), you may be able to defer RMDs from that specific plan until you retire — but only from that plan, not from IRAs or plans from former employers.

Which Accounts Are NOT Subject to RMDs

Roth IRAs are not subject to RMDs during the account owner's lifetime — ever. This is one of the most powerful features of Roth accounts: your money can continue growing tax-free indefinitely, with no forced distributions. As of 2024, Roth 401(k) and Roth 403(b) accounts also no longer require RMDs during the owner's lifetime, closing the gap that previously existed between Roth IRA and Roth employer plan treatment. This change, made by SECURE 2.0, means that a retiree with a large Roth 401(k) balance can roll it into a Roth IRA (to preserve the no-RMD treatment) or simply leave it in the plan without worrying about mandatory distributions. Health Savings Accounts (HSAs) also have no RMDs. See our NC retirement income taxes guide for a full breakdown of how each account type is taxed in North Carolina.

The RMD Starting Age in 2026: Age 73

The SECURE 2.0 Act, signed into law in December 2022, raised the RMD starting age from 72 to 73 for anyone who turns 73 on or after January 1, 2023. If you turn 73 in 2026, your first RMD year is 2026. A second increase — to age 75 — is scheduled to take effect for those who were born on or after January 1, 1960 (meaning they will not turn 73 until 2033 or later). For anyone retiring in 2026 who is currently age 73 or older, the applicable starting age is 73. The practical benefit of the higher starting age is a longer window to do Roth conversions and other tax planning before mandatory taxable distributions begin. As our guide to retiring in NC explains, the years between retirement and age 73 are often the most valuable window for Roth conversion strategy.

RMD Deadlines: The April 1 Rule and the Double-RMD Trap

Understanding the timing rules for RMDs is critical because a misstep can cause you to take two full RMDs in the same calendar year — doubling your taxable income for that year and the NC and federal taxes that go with it.

Your First RMD: April 1 Deadline

For your very first RMD — the one for the calendar year you turn 73 — you have an extended deadline. You may take it anytime during that calendar year, or delay it until April 1 of the following calendar year. For example, if you turn 73 in 2026, your first RMD covers tax year 2026. You can take it any time in 2026, or you can delay it until as late as April 1, 2027. The choice to delay sounds appealing — you keep money invested longer — but it comes with a significant catch.

The Double-RMD Trap in Year Two

If you delay your first RMD until April 1, 2027, you must also take your second RMD (for tax year 2027) by December 31, 2027. That means you take two full RMDs within the same calendar year: one by April 1 and one by December 31. Both distributions land on your 2027 federal and NC tax returns. For NC retirees, this doubles the 3.99% tax hit in a single year and may also push more of your Social Security benefits into federal taxable income (see the Social Security section below). In most cases, taking your first RMD in the year you turn 73 — rather than delaying to April 1 — avoids this problem and spreads the tax impact evenly across both years. The exception is if you expect a significant income drop in year two that would put you in a lower federal bracket, making the double-year tax hit worthwhile.

Annual RMD Deadline: December 31

For every RMD after your first, the deadline is December 31 of the calendar year for which the RMD is required. There are no extensions, no grace periods, and no deferrals. If you miss the December 31 deadline, the IRS imposes an excise tax on the amount you should have withdrawn. Under SECURE 2.0, the penalty was reduced from a punishing 50% to 25% of the shortfall — and further reduced to just 10% if you correct the missed RMD within the "correction window" (generally, before the IRS issues a deficiency notice or within two years of the missed deadline, whichever is earlier). Even at 10% or 25%, the penalty is on top of ordinary income tax on the distribution, making missed RMDs genuinely expensive. Set a calendar reminder and take your RMD well before year-end — financial custodians can also set up automatic annual distributions to ensure you never miss the deadline.

How to Calculate Your RMD

The calculation itself is straightforward: divide your prior year-end account balance by a life expectancy factor from the IRS Uniform Lifetime Table. The result is the minimum you must withdraw for the current year.

The IRS Uniform Lifetime Table

The IRS updated the Uniform Lifetime Table in 2022 to reflect longer modern life expectancies, resulting in smaller RMDs than the old table required. The table assigns a life expectancy factor to each age; a larger factor means a smaller required withdrawal as a percentage of your account balance. The table below shows the factors for common retirement ages:

There is one exception to using the Uniform Lifetime Table: if your sole beneficiary is a spouse who is more than 10 years younger than you, you may use the IRS Joint Life and Last Survivor Expectancy Table (Table II) instead. Table II produces lower factors, meaning smaller RMDs, because the calculation accounts for the longer combined life expectancy of a younger spouse. This can meaningfully reduce your annual required withdrawal if your spouse is substantially younger.

Step-by-Step RMD Calculation Example

Suppose you turned 74 in 2026 and your traditional IRA balance on December 31, 2025 was $480,000. Your RMD for 2026 is: $480,000 ÷ 25.5 = $18,824. That is the minimum you must withdraw from this IRA by December 31, 2026. You can always take more — RMDs are a floor, not a ceiling — but $18,824 is what the IRS requires. At NC's 3.99% tax rate, the NC income tax on this RMD alone is approximately $751. Federal income tax also applies at your marginal rate. If you have multiple traditional IRAs, calculate the RMD for each one separately (using each account's prior year-end balance), then add them together — you can satisfy the combined total by withdrawing from any combination of your IRA accounts. The balance you use is always the December 31 balance from the prior year, which your custodian will report on Form 5498 by May 31.

How RMDs Interact with Social Security Taxation

One of the most important — and frequently overlooked — effects of RMDs is how they interact with the taxation of Social Security benefits at the federal level. The IRS determines how much of your Social Security benefit is taxable based on your "provisional income" (adjusted gross income plus tax-exempt interest plus 50% of your Social Security benefits). If your provisional income exceeds $34,000 (single) or $44,000 (married filing jointly), up to 85% of your Social Security benefits are federally taxable. RMDs increase your AGI dollar-for-dollar, which can push more of your Social Security into the federally taxable zone. NC does not tax Social Security regardless — NC allows a full deduction for any Social Security amount that was taxed federally. But the federal tax on Social Security triggered by your RMDs is real and can be substantial. A married NC couple with $30,000 in Social Security benefits and $60,000 in RMDs may owe federal income tax on $25,500 of their Social Security (85% × $30,000) as a direct consequence of their RMD income level, even though NC taxes none of that Social Security. For more detail, see our guide to Social Security taxation in North Carolina.

How NC Taxes RMDs in 2026

RMDs are taxed in North Carolina as ordinary income at the state's flat 3.99% rate. There is no special NC deduction or exemption for RMD income — no age-based exclusion, no retirement income deduction comparable to what some other states offer. Every dollar you withdraw from a traditional IRA, 401(k), or other pre-tax account is added to your NC taxable income and taxed at 3.99%, after the NC standard deduction is applied.

NC Income Tax on a Typical RMD

For an NC retiree at age 75 with $600,000 in traditional IRA assets, the 2026 RMD is $600,000 ÷ 24.6 = $24,390. The NC income tax on that distribution (ignoring the standard deduction for simplicity) is $24,390 × 3.99% = approximately $974. For a married couple where both spouses have separate IRA accounts, multiply accordingly. The NC standard deduction — which your custodian's withholding does not automatically account for — reduces the amount subject to NC tax, so your actual NC bill will be lower once you file. To ensure you are withholding enough NC tax from your RMDs throughout the year, you can submit Form NC-4P (the NC withholding certificate for pension and annuity payments) to your IRA custodian requesting a specific percentage or dollar amount withheld for NC state taxes. See our NC standard deduction guide for the 2026 deduction amounts that will reduce your taxable RMD income.

Withholding NC Tax from Your RMDs

Federal tax withholding from IRA distributions defaults to 10% unless you opt out or request a different rate via Form W-4R. NC state tax withholding from IRA and retirement plan distributions is not automatic — you must request it by submitting an NC-4P to your custodian. If you do not withhold NC tax throughout the year, you will owe the full 3.99% when you file your NC D-400, potentially along with NC estimated tax underpayment penalties if your total NC tax liability exceeds $1,000 and you have not been making quarterly estimated payments. NC retirees who take RMDs as their primary income should either request NC withholding on their distributions or make quarterly estimated tax payments. The NC estimated tax payment schedule follows the same quarterly deadlines as federal: April 15, June 15, September 15, and January 15. Our NC estimated tax payments guide covers the mechanics.

RMDs and the NC Standard Deduction

The NC standard deduction applies to your total NC taxable income — it is not specific to RMDs, but it directly offsets RMD income for retirees whose primary income source is retirement accounts. For a single filer in 2026, the standard deduction eliminates NC tax on the first portion of your RMD income. For a married couple filing jointly, the combined standard deduction means that a portion of both spouses' RMDs may be effectively NC-tax-free. The NC standard deduction is set independently of the federal amount and does not change with inflation each year. NC also allows taxpayers to itemize on their NC return even if they took the federal standard deduction — though for most retirees the standard deduction is the better option once mortgage interest has been paid off.

Strategies to Reduce NC Tax on RMDs

While you cannot avoid RMDs once you reach age 73, several strategies can significantly reduce the income tax you pay on them — both federally and at NC's 3.99% rate.

Roth Conversions Before Age 73

The most powerful long-term strategy for reducing RMDs is Roth conversion — moving money from a traditional IRA into a Roth IRA during the years before your RMDs begin. Roth IRA balances are not subject to RMDs and grow tax-free permanently. Every dollar you convert to Roth before age 73 is a dollar that will never be subject to an RMD — and because you pay the income tax at conversion (at whatever your rate is in that year), the conversion also pays NC at 3.99% at that time, with no future NC tax on qualified withdrawals. The optimal Roth conversion window is the period between retirement and age 73 — or even before retirement if you have a low-income year. During this window, your income may be lower than it was while working, meaning federal and NC taxes on the conversion are minimal. A couple who retired at 65 with $500,000 in a traditional IRA and converts $50,000 per year for eight years reduces their traditional IRA balance significantly, lowers their future RMDs, and may keep their Social Security largely out of the federal taxable zone. See our NC Roth IRA guide for how Roth accounts work and how to open one.

Qualified Charitable Distributions: The $111,000 Strategy

A Qualified Charitable Distribution (QCD) allows IRA owners aged 70½ or older to transfer money directly from their IRA to a qualifying charity — and that transfer counts toward their RMD for the year while being completely excluded from gross income. In 2026, the QCD limit is $111,000 per person per year, confirmed by IRS Notice 2025-67. For a married couple where both spouses have IRAs and are both 70½ or older, the combined annual QCD limit is $222,000. The tax advantage of a QCD over a regular charitable deduction is significant: a QCD reduces your AGI directly, whereas a charitable deduction only helps if you itemize (and exceeds your standard deduction). For NC retirees who give to charity and take the standard deduction, a QCD is essentially a charitable deduction they would otherwise not receive — it reduces both federal and NC taxable income by the QCD amount. A retiree with a $30,000 RMD who directs the entire amount to charity via QCD pays zero federal and zero NC income tax on that $30,000, compared to the 3.99% NC tax they would owe on a regular withdrawal even with a charitable itemized deduction below the standard deduction threshold. The QCD must go directly from your IRA custodian to the charity — you cannot receive the funds yourself and then donate them. Not all charities qualify; donor-advised funds and private foundations are excluded.

Aggregation, Timing, and Taking RMDs Early in Retirement

For NC retirees still in the pre-RMD window, voluntarily taking IRA distributions before age 73 — even when not required — can reduce future RMD amounts and potentially keep income in lower brackets throughout retirement. This strategy works because smaller future account balances generate smaller future RMDs. Taking $20,000 per year from a traditional IRA during ages 65–72 reduces the balance subject to the RMD calculation at 73, lowering every subsequent mandatory distribution for life. The trade-off is paying NC tax at 3.99% now on distributions you might otherwise defer — but if your income is lower before age 73 than it will be after (when Social Security, RMDs, and possibly other income stack up), paying tax at a lower total rate now beats paying a higher total rate later. This "fill-the-bracket" strategy is particularly effective for NC retirees in years when their total income falls in lower federal brackets. Our NC 401(k) retirement planning guide covers this and related distribution strategies in detail.

Inherited IRAs and RMD Rules for NC Beneficiaries

When you inherit an IRA, you become subject to RMD rules yourself — but they operate differently than the rules for the original owner. Getting these rules wrong can result in significant penalties, and the rules have changed dramatically since 2020.

The 10-Year Rule for Non-Spouse Beneficiaries

Under the SECURE Act (2019), most non-spouse beneficiaries who inherit an IRA must fully distribute the account by December 31 of the tenth year following the original owner's death. A child, sibling, or friend who inherits an IRA from someone who died in 2024 must empty the account by December 31, 2034. There is flexibility within the 10 years — you can take nothing for nine years and withdraw everything in year 10, or spread distributions however you choose. However, if the original IRA owner had already begun taking their own RMDs before death (i.e., was already over age 73), the IRS finalized rules in 2024 requiring that non-spouse beneficiaries also take annual RMDs during the 10-year period. The annual RMDs within the 10-year window are calculated based on the beneficiary's own life expectancy, and the account must still be fully distributed by year 10. Each distribution from an inherited traditional IRA is taxed in NC at 3.99% as ordinary income in the year received, the same as any other IRA withdrawal. For more on inherited IRA tax planning, including the step-up in basis for inherited investments, see our NC inheritance tax guide.

Surviving Spouse Exceptions

Surviving spouses who inherit a retirement account have substantially more flexibility than other beneficiaries. A surviving spouse can roll the inherited IRA into their own IRA and treat it as their own account — meaning their own age 73 RMD starting date applies, and the Uniform Lifetime Table applies to future distributions. Alternatively, a surviving spouse can keep the account as an inherited IRA and begin distributions based on the deceased spouse's life expectancy, which may be beneficial if the surviving spouse is younger than 73 and wants to defer distributions without being bound by their own age. A third option under SECURE 2.0 allows a surviving spouse to elect to be treated as the deceased employee for purposes of determining the required beginning date. The spousal rollover option generally provides the most flexibility and is the most common choice, particularly for younger surviving spouses who benefit from continued tax-deferred growth. A surviving spouse who inherits a Roth IRA can roll it into their own Roth IRA and owe no RMDs and no income tax on qualified withdrawals — ever.

Eligible Designated Beneficiaries: The Stretch Option Remains

A limited group of beneficiaries — called Eligible Designated Beneficiaries (EDBs) — are exempt from the 10-year rule and can still use the life expectancy (stretch) method for inherited IRAs. EDBs include surviving spouses, minor children of the deceased account owner (until they reach the age of majority, at which point their 10-year clock starts), individuals with a qualifying disability or chronic illness, and any person who is not more than 10 years younger than the deceased account owner. An NC retiree who inherits an IRA from a sibling only one year older than them qualifies as an EDB and can stretch distributions over their remaining life expectancy, spreading the taxable income — and the NC 3.99% tax — over a much longer period than the 10-year rule allows. If you inherit an IRA and believe you may qualify as an EDB, confirm your eligibility with a tax advisor before taking distributions, as the stretch method significantly reduces the tax burden compared to the 10-year mandatory distribution.

NC-Specific RMD Planning Considerations

Several features of NC's tax structure interact with RMDs in ways that differ from other states and create specific planning opportunities for NC retirees.

NC's Flat Rate Makes RMD Bracket Management Simpler

Unlike states with graduated income tax brackets, NC's flat 3.99% rate means that the marginal NC tax on every additional dollar of RMD income is always the same. A retiree with $50,000 in RMDs and a retiree with $200,000 in RMDs both pay NC tax at exactly 3.99% on each dollar above the standard deduction. This simplifies state-level bracket management — you do not need to worry about pushing into a higher NC bracket by taking a larger distribution in a given year. The optimization is primarily federal: keeping total income below the thresholds for higher federal brackets, IRMAA Medicare surcharges, and increased Social Security taxation is where bracket management yields the most savings for NC retirees. NC's flat rate rides along at 3.99% regardless. See our NC capital gains tax guide for how capital gains and investment income from non-retirement accounts interact with RMDs in the same tax year.

NC Has No Estate Tax on Remaining IRA Balances

When an NC retiree dies with money still in their traditional IRA — whether from taking RMDs but leaving growth behind, or from not having depleted the account — those remaining balances pass to heirs without any NC estate or inheritance tax. NC eliminated its estate tax in 2013 and has never had a state inheritance tax. The remaining IRA balance does become income to the beneficiaries as they take distributions, taxed at the beneficiary's ordinary income rate (NC 3.99% if they are NC residents), but there is no separate state-level transfer tax on the inheritance itself. This is an advantage for NC retirees who want to leave retirement assets to heirs — the only tax burden on the inherited IRA is income tax as it is distributed, not an estate or inheritance tax at the time of transfer. For heirs who are NC residents, each RMD-like distribution from the inherited account will be taxed at NC's 3.99% rate. Our NC inheritance tax guide covers the full picture of what heirs owe when they receive an NC estate.

Coordinating RMDs with Other NC Retirement Income

Many NC retirees receive multiple income streams simultaneously: Social Security (not taxed in NC), a pension or annuity (taxed at 3.99% unless Bailey- or military-exempt), RMDs from traditional accounts (taxed at 3.99%), and possibly part-time earnings or investment income. When RMDs stack on top of pension income and part-time work, total NC taxable income can be higher than expected. The NC standard deduction provides a first layer of offset, but retirees with multiple income streams should model their expected NC tax bill each year — not just at initial retirement — because RMDs grow as a percentage of account balances as the life expectancy factor decreases with age. A retiree at 80 who has a smaller life expectancy factor (20.2) must withdraw nearly 5% of their account annually, compared to 3.77% at age 73. For retirees with large pre-tax balances and multiple other income sources, total NC taxable income can increase significantly as they age, even if account balances are declining. Proactive planning — including Roth conversions, QCDs, and coordinating withdrawal timing across accounts — is more valuable the earlier it starts. Our full guide to retiring in North Carolina covers how RMDs fit into the broader retirement income picture.

Frequently Asked Questions About RMDs and NC Taxes

What happens if I miss my RMD deadline in NC?

Missing an RMD deadline triggers a federal excise tax — there is no separate NC penalty, but the missed RMD will still be owed and will be taxable income in NC (at 3.99%) when you eventually take it. The federal excise tax is 25% of the amount you should have withdrawn but did not. If you correct the mistake within the IRS correction window — generally before the IRS sends you a notice or within two years of the missed distribution, whichever is earlier — the penalty drops to 10%. To correct a missed RMD, take the distribution as soon as you realize the error, file IRS Form 5329 with your return, and request the penalty waiver using the correction window if applicable. The IRS has historically been reasonably accommodating for first-time missed RMDs where the taxpayer corrects quickly and has a reasonable explanation. Whatever the circumstances, do not ignore a missed RMD — the penalty compounds the longer you wait.

Can I reinvest my RMD after taking it?

Once you have taken an RMD and paid taxes on it, you can do whatever you want with the after-tax proceeds — including investing them in a taxable brokerage account, spending them, donating them to charity, or contributing to a Roth IRA (if you have earned income and meet the contribution eligibility rules). You cannot return RMD funds to a traditional IRA or roll them into a Roth IRA unless you have other earned income supporting a Roth contribution that year. RMDs specifically are not eligible for rollover — the IRS prohibits putting RMD dollars back into a tax-advantaged account to undo the distribution. If you take more than the RMD minimum in a given year, the excess (above the RMD amount) can be rolled over within 60 days if you change your mind, subject to the once-per-year IRA rollover rule. The RMD amount itself, however, cannot be rolled back.

Do I pay NC tax on RMDs from accounts I have in other states?

Yes. If you are an NC resident, NC taxes your worldwide income — including RMDs from IRAs and retirement plans established when you lived in another state. It does not matter where the IRA was opened, where the custodian is located, or where the contributions were made. As a full-year NC resident, all of your RMD income is subject to NC's 3.99% flat rate on your NC D-400 return. If you moved to NC from another state partway through the year, only the income earned after becoming an NC resident is subject to NC income tax — you would file a part-year resident return for that transition year. Going forward as a full NC resident, every subsequent year's RMDs are fully subject to NC taxation.

Does NC require withholding on IRA distributions?

NC does not automatically withhold state income tax from IRA or retirement plan distributions unless you request it. To have NC tax withheld from your RMDs or other IRA distributions, submit Form NC-4P (Withholding Certificate for Pension or Annuity Payments) to your IRA custodian specifying the NC withholding amount or percentage you want applied. If you do not withhold NC tax throughout the year, you must make quarterly estimated tax payments to avoid underpayment penalties. NC's estimated tax underpayment penalty applies if your total NC tax liability for the year exceeds $1,000 and you have not paid at least 90% of the current year's tax (or 100% of the prior year's tax) through withholding or estimated payments. For retirees whose primary income is RMDs with no employer withholding, quarterly estimated payments are typically the most reliable way to stay current with NC taxes.