Her required distribution started this year, not in 2028. I had the date wrong.

This article first appeared in The Nest Egg, my daily email, on 2026-10-01. Read the original issue. It is educational, not a recommendation for you. The household in it is a hypothetical example, and market figures are as of the date shown and will have changed.

Every figure below names its document. Every calculation is shown. Nothing here is a forecast.

Good morning. The Dow gave up 0.86% while the Nasdaq 100 added 0.23%, and the 30-year went to 5.640%. Then the December 31 list, which turned out to have an item on it I did not know was there.

In today's issue

The tape. A split session, a firmer VIX, and the long bond at 5.640%. Two minutes.

26.5. The number I should have been using for three weeks, and what it costs that I was not. Four minutes.

$9,732.06. One form, filed before December 31, that fixes most of it. Four minutes.

One more thing. The extension that exists, and why taking it costs $2,047.72. One minute.

The tape

Closing levels and session changes, CNBC US markets, September 30, 2026. Gold and WTI crude are front-month futures settlements, measured settlement to settlement; the gold contract is December 2026 and crude is November 2026, unchanged. Treasury yields are quoted to three decimals and the change is in basis points.

The story

Yesterday this letter promised a page of December 31 deadlines. Building it meant opening the IRS required distribution rules rather than working from memory, and the first sentence on that page says required minimum distributions begin in the year the account owner reaches age 73.

This household is 73 now.

Every letter for three weeks has said her first required distribution arrives at 75, on a Table III denominator of 24.6. Both halves are wrong for these two people. The denominator at 73 is 26.5, and the distribution is due this December 31.

That is the third correction in eight days. Tuesday it was a yield. Wednesday it was a quantity. Today it is a date, and a date is worse, because the other two were arguments and this one is a deadline.

The position

$1,200,000 in the traditional IRA. Divided by 26.5, the 2026 required distribution is $45,283.02.

Now put that against yesterday's budget. Her taxable Social Security caps at $37,400, the single Medicare threshold is $109,000, and the gap is $71,600 of countable income for everything the portfolio produces.

A required distribution is ordinary income. It goes in that budget first, ahead of every bond.

$71,600 minus $45,283.02 leaves $26,316.98 for the ladder. At a 4.51% yield to maturity, that is a municipal ladder of $583,525.08.

Yesterday's letter sized it at $1,587,583.15. The required distribution I did not know about takes $1,004,058.07 of municipal capacity off the table, which is 63% of the ladder and more than a third of the household.

It also breaks something else. You cannot convert a required distribution. It has to come out first, and it is never eligible for a Roth. Every conversion this month was sized as though the account were untouched.

The arithmetic

Step one. What the distribution costs if she simply takes it.

Adjusted gross income of $82,683.02. Taxable income of $64,533.02. Federal tax of $8,909.26 against $2,062 with no distribution.

Medicare income of $154,283.02, which is $45,283.02 past the $109,000 line and into the second single tier. Surcharge: $2,884.80.

Total: $11,794.06, against $2,062. The distribution costs her $9,732.06, an effective rate of 21.49% on money the tax table says is taxed at 22% at the very top and 12% for most of it.

Step two. The form that removes it.

A qualified charitable distribution goes directly from the IRA to a charity. It satisfies the required distribution. It is excluded from income entirely, so it never reaches adjusted gross income, never reaches the Social Security formula, and never reaches the Medicare calculation.

Give the whole $45,283.02 that way and her adjusted gross income is $37,400, her taxable income is $19,250, her tax is $2,062, her Medicare income is exactly $109,000, and her surcharge is zero.

$9,732.06 a year, every year, from one instruction to a custodian.

The annual limit is $108,000 per person, published for 2025 and indexed after that, and each spouse has their own. Her required distribution fits inside it 2.4 times over.

Step three. What it restores.

With the distribution out of her income, the full $71,600 budget belongs to the ladder again, and the ladder goes back to $1,587,583.15.

One form moves $1,004,058.07 of capacity. Nothing else this month came close.

Step four. The one that is not a dollar figure.

If he dies, the inherited IRA has to be retitled to her before anything else happens. A surviving spouse may treat it as her own and convert it. A non-spouse beneficiary may never convert an inherited IRA, under any circumstance.

That step has no cost and no deadline written next to it, and it gates $27,612.77 of planning that does have one.

Step five. The one that is free.

The I bond limit is $10,000 per Social Security number per calendar year. December 31 and January 1 are two calendar years, five weeks apart.

$20,000 in, at the 4.26% composite rate, is $852 a year of return that her Medicare income never sees. It covers Tuesday's $12,416.85 leftover 1.61 times over.

Left: every December 31 item this household is carrying, ranked by the dollars it moves. Right: her $71,600 countable-income budget with the required distribution inside it, and with the required distribution given away as a qualified charitable distribution. Required distributions begin at age 73 and the Table III denominator at 73 is 26.5: IRS required minimum distribution FAQs and Publication 590-B. The 25% excise tax on an amount not withdrawn, reduced to 10% if corrected within two years: same FAQ. QCD limit $108,000 per person as published for 2025 and indexed after: Publication 590-B. I bond rate and the $10,000 per Social Security Number annual limit: TreasuryDirect. Hypothetical illustration of published rates, built to show arithmetic. Not a projection of any reader's result and not a recommendation.

What the four of them would say

The portfolio manager. Three weeks of ladder sizing rested on a date, and the date was wrong, so the sizing was wrong. Notice that no market moved and no assumption failed. The portfolio work was fine; the calendar underneath it was not. Before you optimize a position, confirm what is already scheduled to happen to it.

The CPA. The 21.49% effective rate on that distribution is the number to sit with. The tax table would tell you 12% with a little at 22%. The extra comes from the Medicare tier, which is not in the tax code, has no bracket structure, and does not appear on any return she files. If you price a distribution off the tax table alone you will be wrong by thousands, and always in the same direction.

The financial planner. This is the third correction in eight days, and the pattern is worth naming: a yield, a quantity, a date. Every one came from reaching for something I already believed instead of opening the document. The arithmetic in this letter has never been the weak point. The inputs are. Check the boring ones, because the boring ones are the ones nobody checks.

The estate attorney. Look at what today did to the conversions. Every one of them was sized against a $1,200,000 account. That account now has a mandatory withdrawal coming out of it first, and those dollars can never go to a Roth. The conversion math this month is not wrong in principle, but it is wrong in size, and it needs re-running from the required distribution up. That is not a footnote. That is next week.

One more thing

There is an extension, and it is a trap.

The first required distribution, and only the first, may be delayed to April 1 of the following year. It sounds like relief. It means two distributions land in 2027: the deferred 2026 one and the 2027 one.

Taken one per year, as cash, the two years cost $23,588.13. Stacked into 2027, they cost $25,635.85.

The extension costs $2,047.72, because $90,566.04 in one year clears a Medicare tier that $45,283.02 in each year does not.

And the failure mode underneath all of it: the excise tax on an amount not withdrawn is 25%, reduced to 10% if corrected within two years. On $45,283.02 that is $11,320.75, the largest single number on today's page, and the only one you earn by doing nothing at all.

Tomorrow

The $109,000 line has been the villain in every letter this month. It has cost this household a surcharge, a dead zone, a ladder, and today an effective rate of 21.49% on a withdrawal she did not choose to take.

There is exactly one window each year when a household can change what it actually buys from Medicare, and it opens on October 15 and closes on December 7.

Tomorrow we spend the whole letter inside it.