How Dividend Income Interacts With Required Minimum Distributions (RMDs)

Dividend income and required minimum distributions (RMDs) arrive from different accounts, follow different tax rules, and land on the same tax return. A retiree with a Traditional IRA and a taxable brokerage account holds two income streams that add together when adjusted gross income (AGI) is calculated. That total decides how much Social Security is taxed, whether Medicare charges an income-related surcharge, and which federal bracket applies to ordinary income.

Stopping dividends or selling every dividend stock inside an IRA is not required. Planning the order and size of withdrawals before the first RMD is due costs less than fixing the tax result afterward. This guide covers the 2026 federal rules, a worked example with real arithmetic, and the points where RMDs and dividends collide. The content is educational and does not replace advice from a licensed tax professional. Only US federal rules are covered, so readers outside the United States should not rely on it.

Quick answer: Dividends earned inside a Traditional IRA are not taxed in the year they are received. Money that leaves the IRA, including the RMD, is taxed as ordinary income. Dividends in a taxable brokerage account are taxed every year: qualified dividends at 0%, 15%, or 20%, and ordinary dividends at regular income tax rates. Both streams raise AGI, and AGI drives Social Security taxation, Medicare IRMAA surcharges, and exposure to the 3.8% Net Investment Income Tax.

Table 1: How different retirement income sources interact with RMDs

Income source	2026 federal tax treatment	Role in retirement income
Dividends retained inside a Traditional IRA	Tax-deferred until withdrawn	Adds cash to the account that can fund the RMD
Traditional IRA RMD	Ordinary income (except any after-tax basis)	Required annual withdrawal
Roth IRA dividends	Tax-free inside the account; qualified withdrawals are tax-free	No RMD for the original owner
Qualified dividends in a brokerage account	0%, 15%, or 20%, depending on taxable income	Counts toward AGI but uses capital gains rates
Ordinary (non-qualified) dividends	Ordinary rates of 10% to 37%	Taxed like wages or pension income
Social Security	0%, up to 50%, or up to 85% of benefits taxable	Taxable share rises as other income rises

Sources: IRS Publication 550, IRS Publication 590-B, IRS Publication 915, Revenue Procedure 2025-32. ¹ ² ⁴ ⁹ ¹⁰

1. Why Dividend Income and RMDs Need to Be Planned Together

An RMD is the minimum amount that must come out of a tax-deferred retirement account each year once the owner reaches the required beginning age. Under SECURE 2.0, that age is 73 for people born from 1951 through 1959 and 75 for people born in 1960 or later.¹ Roth IRAs have no lifetime RMDs for the original owner, and since 2024 the same exemption covers Roth 401(k) accounts.

The IRS does not base an RMD on the dividends an account earned during the year. The calculation uses two inputs:

The account balance on December 31 of the previous year.
The distribution period from the IRS Uniform Lifetime Table (26.5 at age 73, 25.5 at age 74, and 24.6 at age 75).

A Traditional IRA worth $500,000 at the end of last year, owned by a 73-year-old, produces an RMD of $500,000 ÷ 26.5 = $18,867.92. Dividends the account earned have no effect on that figure except through the year-end balance. A different table applies when a spouse who is more than 10 years younger is the sole beneficiary, and inherited accounts follow separate rules.¹

Deadlines. The RMD for each year is due by December 31. The first RMD can wait until April 1 of the year after the owner reaches the required age, but that choice means two taxable distributions land in one calendar year. Someone who turns 73 in 2026 and delays the first RMD to April 2027 would report both the 2026 and 2027 RMDs on the 2027 return. Multiple Traditional IRAs are calculated separately but the total can come from any one of them. 401(k) and 403(b) plans are handled account by account.¹

Penalty for a missed RMD. The excise tax is 25% of the shortfall. It drops to 10% when the missed amount is withdrawn and the correction is reported within the IRS correction window, which closes at the end of the second year after the missed year (or earlier if the IRS mails a notice of deficiency or assesses the tax). A waiver for reasonable cause can be requested on Form 5329.¹

Four Parts of a Workable Plan

Account location. Knowing which dividend holdings sit in taxable, Traditional IRA, and Roth accounts shows where each dollar of income will be taxed.
Withdrawal order. RMDs are fixed. Everything else (brokerage sales, Roth withdrawals, Social Security timing) can be arranged around them.
Tax monitoring. Taxable dividends, RMDs, Social Security, and Medicare MAGI should be projected together before the year ends.
Liquidity. A cash reserve prevents forced stock sales when markets fall and dividends are cut.

Maximizing dividend yield is not the target. The target is spendable income after federal tax, state tax, and Medicare premiums.

2. The Three-Phase Timeline: Before RMDs, During RMDs, and Legacy

How Dividend Income Interacts With Required Minimum Distributions (RMDs)

Phase 1: Before RMDs Begin

Dividends inside Traditional IRAs and 401(k) plans grow without annual tax, but the balance also grows toward larger future RMDs. The years between retirement and the first RMD often carry lower taxable income than any other period, which makes them the natural window to review Roth conversions.

A conversion is taxed as ordinary income in the year it happens. A conversion that pushes MAGI above the IRMAA threshold ($109,000 single or $218,000 joint, measured two years before the premium year) raises Medicare premiums, and it can also increase the taxable share of Social Security. There is no universal conversion amount. A projection for the specific household, run through a tax software or by a CPA, shows where the next bracket or surcharge begins.

Items worth reviewing in this phase:

The balance split between taxable, Traditional, and Roth accounts.
Expected taxable dividends from the brokerage account, qualified versus ordinary.
The planned Social Security claiming age.
Cash reserves covering one to two years of withdrawals.

Phase 2: The RMD Years

Once RMDs begin, the annual withdrawal becomes a fixed part of taxable income. Dividend-paying stocks held inside the IRA throw off cash during the year. That cash can stay in the account or be used for the RMD when it comes due.

An RMD does not have to be paid in cash. IRA custodians allow an in-kind distribution, which moves shares from the IRA into a taxable brokerage account. The fair market value on the transfer date counts toward the RMD and is taxed as ordinary income. Afterward, the shares keep paying dividends, but those dividends are taxed each year in the brokerage account. An in-kind transfer keeps the investment and does not remove the tax on the distribution.

Qualified charitable distributions (QCDs). A QCD is a direct transfer from an IRA to a qualified charity by an IRA owner aged 70½ or older. For 2026 the limit is $111,000 per person.¹³ A QCD counts toward the RMD but is excluded from AGI, which means it does not raise Social Security taxation or MAGI. A QCD is the only way to satisfy part of an RMD without adding to taxable income. The money must go from the custodian to the charity. A check made out to the IRA owner does not qualify. Donor-advised funds are not eligible recipients.

Phase 3: Legacy and Beneficiaries

A Traditional IRA passes to heirs with its income tax attached. Most non-spouse beneficiaries must empty an inherited IRA by the end of the tenth year after the owner's death. When the owner died on or after the date RMDs began, the beneficiary must also take annual distributions in years one through nine under the final regulations the IRS issued in 2024.³ Spouses, minor children of the owner, disabled or chronically ill beneficiaries, and beneficiaries not more than 10 years younger than the owner are classed as eligible designated beneficiaries and have more flexibility.

Shares in a taxable brokerage account get a stepped-up cost basis to fair market value at death, so unrealized gains disappear for income tax purposes. Roth IRAs pass tax-free in most cases, but inherited Roth accounts still follow the 10-year rule.

Table 2: Retirement milestones for dividend investors

Age or milestone	What changes	Link to dividend income
59½	The 10% early-withdrawal tax on IRA distributions ends (exceptions exist before this age)	Penalty-free access to IRA dividends and sales
62	Earliest Social Security retirement claim, with a permanent reduction	Dividends can cover the gap while claiming is delayed
63	Income at this age sets Medicare premiums at 65	Roth conversions and large sales affect IRMAA two years later
65	Medicare eligibility; enrollment window opens three months before the birthday month. The $6,000 senior deduction and extra standard deduction begin in the tax year the person turns 65	Taxable dividends reduce the senior deduction once MAGI passes $75,000 (single) or $150,000 (joint)
66 to 67	Full retirement age: 66 and 2 to 10 months for birth years 1955 to 1959, and 67 for 1960 and later	Claiming at full retirement age removes the earnings test
70	Delayed retirement credits stop; benefit is at its maximum	Dividends and IRA withdrawals fund spending until then
70½	QCDs become available	Charitable giving without adding to AGI
73	RMD start age for birth years 1951 to 1959	Mandatory taxable withdrawals begin
75	RMD start age for birth year 1960 and later	Extra years to plan conversions

Sources: IRS, Social Security Administration, Medicare.gov. ¹ ⁵ ¹²

3. How RMDs Raise the Tax Cost of Dividend Income

Preferential rates apply to qualified dividends only. An RMD never qualifies for them. Traditional IRA distributions are ordinary income, and they stack on top of wages, pensions, and ordinary dividends before qualified dividends are layered above.

The dollar ranges that decide the rate on qualified dividends for 2026, from Revenue Procedure 2025-32, are shown below.⁹

Table 3: 2026 qualified dividend rates by taxable income

Rate	Single	Married filing jointly
0%	Up to $49,450	Up to $98,900
15%	$49,451 to $545,500	$98,901 to $613,700
20%	Over $545,500	Over $613,700

The 2026 standard deduction is $16,100 for single filers and $32,200 for married couples filing jointly.⁹ A person aged 65 or older adds $2,050 (single) or $1,650 per spouse (joint). The One Big Beautiful Bill Act also created a temporary $6,000 deduction per person aged 65 or older for tax years 2025 through 2028, which shrinks as MAGI rises above $75,000 (single) or $150,000 (joint).¹² For a single filer aged 65 or older, those pieces add up to $24,150 of deductions before any itemizing. An RMD or large dividend payout that raises MAGI past those phase-out levels reduces the senior deduction, which makes the marginal tax rate on the extra dollars higher than the bracket suggests.

A qualified dividend must also meet the holding rule: the shares must be held more than 60 days during the 121-day period that starts 60 days before the ex-dividend date. Most REIT and money market fund payouts do not qualify and are taxed as ordinary income.²

The Social Security Interaction

Social Security benefits become taxable when provisional income passes fixed thresholds. Provisional income is AGI, plus tax-exempt interest, plus half of the Social Security benefit.⁴

Single filers: up to 50% of benefits are taxable between $25,000 and $34,000; up to 85% above $34,000.
Married filing jointly: up to 50% between $32,000 and $44,000; up to 85% above $44,000.

These thresholds were set in 1983 and 1993 and are not adjusted for inflation, so more retirees cross them every year. Both RMDs and taxable dividends count in AGI. A single retiree with $24,000 of Social Security, $38,000 of dividends, and a $25,000 RMD has provisional income of $75,000. That is well above $34,000, so the maximum 85% of benefits ($20,400) is taxable. The 2025 law did not change this calculation. The $6,000 senior deduction lowers taxable income but does not alter the taxable portion of Social Security.

Medicare IRMAA and the Two-Year Lookback

The Income-Related Monthly Adjustment Amount (IRMAA) is a surcharge added to Medicare Part B and Part D premiums for higher-income enrollees. Social Security uses the MAGI (AGI plus tax-exempt interest) on the tax return for the year two years earlier. The 2026 premiums are set from 2024 returns.⁵ ¹¹ The 2027 premiums will use 2025 returns, and CMS had not yet published the final 2027 figures as of November 3, 2026.

Table 4: 2026 Medicare Part B premiums by 2024 MAGI

Single MAGI	Joint MAGI	Total monthly Part B premium
$109,000 or less	$218,000 or less	$202.90
$109,001 to $137,000	$218,001 to $274,000	$284.10
$137,001 to $171,000	$274,001 to $342,000	$405.80
$171,001 to $205,000	$342,001 to $410,000	$527.50
$205,001 to $499,999	$410,001 to $749,999	$649.20
$500,000 or more	$750,000 or more	$689.90

Part D adds a surcharge of $14.50 to $91.00 per month in the same income tiers, on top of the drug plan's own premium. The tiers work as cliffs, not gradual slopes. One dollar over $109,000 of MAGI for a single filer costs $81.20 more per month, or $974.40 over twelve months, for each enrolled person. A one-time spike such as a large Roth conversion, a stock sale, or a lump-sum IRA withdrawal can trigger this even when ordinary income is lower in other years. A life-changing event such as retirement, marriage, divorce, or the death of a spouse allows an appeal to Social Security using Form SSA-44.⁵

4. Where Dividend Stocks Sit Relative to RMDs

A taxable brokerage account, a Traditional IRA, and a Roth IRA treat the same dividend differently. The right mix depends on withdrawal needs, tax brackets, and what is meant to pass to heirs.

Traditional IRA: Tax-Deferred Dividends

Dividends paid inside a Traditional IRA create no tax that year. Every dollar withdrawn later is ordinary income, whether it began as a contribution, a dividend, or price growth. When the RMD is larger than the dividends the account pays, the difference comes from cash in the account or from selling shares inside it.

Roth IRA: Tax-Free Growth

Qualified Roth distributions are tax-free when the account has been open at least five tax years and the owner is 59½ or older (or meets another qualifying condition).⁶ The original owner takes no RMDs. High-yield holdings placed here keep paying dividends that never reach AGI. Roth balances also serve as a reserve for years when other income pushes close to a surcharge threshold.

Taxable Brokerage: Flexible but Fully Visible on the Tax Return

Brokerage dividends are reported on Form 1099-DIV every year, with qualified dividends in box 1b. No RMD applies. Dividends from this account can cover spending before RMDs begin and supplement RMDs afterward. The tradeoff is that every dollar counts in AGI in the year it is paid, whether it is spent or reinvested.

Table 5: Comparing dividend investments across account types

Feature	Taxable brokerage	Traditional IRA	Roth IRA
Tax on dividends when paid	Yes, every year	No	No
Tax on withdrawals	Capital gains on sold shares; none on cost basis	Ordinary income on the full amount	None if qualified
Lifetime RMD for the owner	None	Yes, from age 73 or 75	None
Reinvested dividends	Still taxed in the year paid	No current tax	No current tax
Cost basis step-up at death	Yes	No	Not needed; withdrawals are tax-free
Typical role	Flexible spending and bridge income	RMD funding	Long-term reserve and legacy

Sources: IRS Publication 550, IRS Publication 590-B, IRS Roth IRA guidance. ² ⁶ ¹⁰

Questions That Guide Account Placement

Are ordinary-rate dividend payers, such as REITs, sitting in the taxable account where they are taxed up to 37%?
Will the Traditional IRA balance grow large enough to push RMDs into a higher bracket?
Does the brokerage account hold enough cash to cover one to two years of spending without selling during a decline?
Can Roth assets stay untouched for later years or for heirs?

5. Worked Example: $24,000 of Annual Dividends and a $22,642 RMD

This example is illustrative. It assumes a single filer, aged 73 in 2026, with no other income, and the following facts:

Traditional IRA balance on December 31, 2025: $600,000.
IRS Uniform Lifetime Table distribution period at age 73: 26.5.
Qualified dividends from the brokerage account: $12,000 per year.
Dividends earned and retained inside the Traditional IRA: $12,000 per year.
Social Security: $24,000 per year.

RMD: $600,000 ÷ 26.5 = $22,641.51, rounded to $22,642. The $12,000 of dividends inside the IRA can fund part of it, leaving about $10,642 to come from other cash or a sale inside the account.

Taxable Social Security. Provisional income = $12,000 (brokerage dividends) + $22,642 (RMD) + $12,000 (half of Social Security) = $46,642. Because that is above $34,000, the taxable amount is the lesser of 85% of benefits ($20,400) or 85% × ($46,642 − $34,000) + $4,500 = $15,246. About $15,246 of the $24,000 benefit is taxable.

AGI. $12,000 + $22,642 + $15,246 = $49,888. That is below the $109,000 IRMAA threshold and below the $75,000 point where the senior deduction begins to shrink. The $12,000 of dividends inside the IRA is not counted separately. It stays in the account until withdrawn, and only the $22,642 RMD enters AGI.

Table 6: Illustrative annual cash flow

Income source	Annual amount	Share of $58,642	Tax treatment
Social Security	$24,000	41%	About $15,246 taxable in this example
Brokerage dividends	$12,000	20%	Qualified; counts in AGI
Traditional IRA RMD	$22,642	39%	Ordinary income
Total cash received	$58,642	100%	Before federal and state tax

Source: Illustrative calculation using IRS Publication 915 rules and 2026 thresholds. ⁴ ⁹

The figures show why an RMD target and a dividend target are separate numbers. Raising the dividend yield of the brokerage account by $5,000 would raise provisional income by $5,000 and add up to $4,250 of taxable Social Security. The extra $5,000 of cash would cost more than the dividend tax alone.

Order of Withdrawals in Practice

Social Security and pension income cover baseline spending.
The RMD is taken, in cash or in kind, before December 31.
Brokerage dividends and the cash balance cover the rest of spending.
Roth withdrawals fill years where the other sources fall short, because they do not add to AGI.
A cash reserve covers shortfalls during market declines or dividend cuts.

The sequence changes with filing status, state of residence, and the bracket the household sits in. The RMD itself is not optional, and QCDs are the only tool that reduces it without raising taxable income.

6. Reducing the Risk of Tax Spikes

Roth Conversions Before RMDs Start

A Roth conversion shifts Traditional IRA money to Roth status and is taxed as ordinary income in the conversion year. Converting in years when taxable income is low, before Social Security and RMDs begin, lowers the Traditional balance that future RMDs are based on. A conversion that crosses an IRMAA threshold raises Medicare premiums two years later, so the amount is usually sized to stay under the next bracket or threshold. A CPA can model the result before the transaction.

Net Investment Income Tax

The Net Investment Income Tax (NIIT) is a 3.8% federal tax on the lesser of net investment income or the amount by which MAGI exceeds the threshold: $200,000 for single filers, $250,000 for married couples filing jointly, and $125,000 for married individuals filing separately. These amounts are set by statute and are not indexed for inflation.⁷ Dividends count as net investment income. Distributions from Traditional IRAs do not, though they do raise MAGI and can pull dividends into the NIIT range.

State Income Tax

State rules change the after-tax picture. Texas, Florida, and several other states levy no personal income tax. California taxes dividends and IRA distributions as ordinary income, with rates reaching 13.3% at the top.⁸ Many states exclude Social Security from taxable income. A move across state lines before RMDs begin changes the tax on every dollar of the distribution.

7. A Common Pattern Among Retirees

A pattern shows up often among retirees who built dividend portfolios over several decades. The plan counts the dividend total and the Social Security check, then adds the RMD late, once the first distribution letter arrives from the custodian. By then the tax result is already set for the year.

Three situations repeat:

Dividends are reinvested in a taxable account while spending is covered by IRA withdrawals, so taxable income is higher than the cash actually spent.
Traditional IRA balances compound untouched for decades with no conversions, then produce RMDs larger than the household's spending needs.
A one-year income spike from a Roth conversion, home sale, or concentrated stock sale lands in the IRMAA lookback without anyone checking the thresholds.

The publisher is not a licensed financial advisor, CPA, or attorney. This page describes published IRS and Medicare rules and does not give individual advice.

8. Common RMD and Dividend Planning Mistakes

Mistake 1: Treating IRA Dividends as the RMD

Dividends credited to a Traditional IRA stay in the account. Only an actual distribution counts. A shortfall triggers the 25% excise tax, or 10% if corrected inside the correction window.¹

Mistake 2: Forgetting the Brokerage Account

Some retirees calculate the RMD correctly and leave brokerage dividends out of the tax projection. Those dividends raise AGI, the taxable share of Social Security, and MAGI for Medicare.

Mistake 3: Selling Dividend Stocks to Raise Cash

Selling is one way to fund an RMD. Cash already in the IRA and in-kind distributions are others. A forced sale during a market decline locks in a lower price and removes a dividend payer from the portfolio. An in-kind transfer still creates a taxable distribution at fair market value.

Mistake 4: Skipping the Two-Year Medicare Lookback

Income earned at 63 sets Medicare premiums at 65. A large taxable event in a single year can add $974.40 or more per person in Part B surcharges alone, two years later, even at the lowest surcharge tier.

Mistake 5: Treating Dividends as a Guaranteed Paycheck

Dividends are set by company boards and can be cut or suspended. During the 2020 downturn, a number of US companies reduced or paused payments. Dividend ETFs carry the same risk across many companies. A cash reserve covers the gap.

9. The 4% Rule, Sequence Risk, and Dividend Sustainability

The 4% guideline comes from financial planner William Bengen's 1994 research. It tested how an initial withdrawal rate, raised each year with inflation, would have held up over rolling 30-year periods in US market history. The result described a historical worst case and is not a guarantee for any future retiree.

Dividends do not remove sequence-of-returns risk. When stock prices fall in the first years of retirement, withdrawals combined with dividend cuts shrink the portfolio faster than the same decline later in retirement. A retiree who spends only dividends avoids selling shares, but depends on companies to keep paying.

Table 7: Initial withdrawal amounts on a $1,000,000 portfolio

Initial withdrawal rate	First-year withdrawal
3.0%	$30,000
3.5%	$35,000
4.0%	$40,000
4.5%	$45,000

Source: Illustrative arithmetic. These figures are not forecasts of portfolio longevity.

Taxes, inflation, spending changes, and RMDs all alter how long a portfolio lasts. For a $1,000,000 Traditional IRA, the first RMD at age 75 is $1,000,000 ÷ 24.6 = $40,650, which already exceeds the 4% line.

10. Retirement Income and RMD Checklist

List every Traditional IRA, SEP-IRA, SIMPLE IRA, 401(k), and 403(b) balance as of December 31.
Confirm the RMD start age from the birth year (73 for 1951 to 1959; 75 for 1960 and later).
Divide each prior-year-end balance by the Uniform Lifetime Table factor for the current age.
Separate dividends earned inside IRAs from dividends paid in taxable accounts, using Form 1099-DIV for the latter.
Split brokerage dividends into qualified and ordinary.
Project AGI, taxable Social Security, and MAGI for the current year and the next.
Check the 2026 IRMAA tiers and the 0%, 15%, and 20% dividend breakpoints.
Decide whether part of the RMD should go to charity as a QCD, starting at age 70½.
Review Roth conversion room before the next bracket, IRMAA tier, or senior-deduction phase-out begins.
Keep a cash reserve of one to two years of planned withdrawals.
Check beneficiary designations on every retirement account.
Update the plan whenever tax law, account values, or health and family circumstances change.

The list works as an audit, not a withdrawal schedule. Brokerage statements, IRA statements, and the prior year's tax return supply most of the numbers.

Main Takeaways

Dividends inside a Traditional IRA are tax-deferred, and RMDs are taxed as ordinary income when withdrawn.
The RMD uses the prior December 31 balance and an IRS factor. Dividends earned during the year do not change it.
Qualified dividends use 0%, 15%, or 20% rates for 2026. RMDs never do.
Provisional income above $34,000 (single) or $44,000 (joint) makes up to 85% of Social Security taxable, and those thresholds are not indexed.
IRMAA uses MAGI from two years earlier. For 2026 premiums, the first surcharge starts above $109,000 single or $218,000 joint.
QCDs up to $111,000 for 2026 count toward the RMD without raising AGI.
A missed RMD carries a 25% excise tax, or 10% when corrected in time.
Dividends do not remove market risk or the risk of payout cuts.

Frequently Asked Questions

1. Do dividends inside a Traditional IRA count toward the RMD?

No. Dividends credited to the account are not a distribution. The RMD must be withdrawn from the account. Dividend cash sitting inside the IRA can be used to fund the withdrawal without selling shares.

2. Are RMDs taxed differently from qualified dividends?

Yes. Traditional IRA RMDs are taxed as ordinary income at rates from 10% to 37%. Qualified dividends in a taxable account are taxed at 0%, 15%, or 20%, depending on taxable income and filing status. For 2026, the 0% rate covers taxable income up to $49,450 for single filers and $98,900 for joint filers.

3. Can dividend income raise Medicare premiums?

Yes. Taxable dividends count in MAGI, and so do taxable RMDs. Medicare uses the return from two years earlier, so income in 2024 set the 2026 premiums. For 2026, the first surcharge begins above $109,000 for single filers and $218,000 for joint filers.

4. Can an in-kind stock transfer satisfy an RMD?

Yes, when the custodian permits it. The fair market value of the shares on the transfer date counts toward the RMD and is taxed as an ordinary IRA distribution. The shares then sit in a taxable account, where future dividends are taxed each year.

5. Is it better to hold dividend stocks in a Roth IRA or a Traditional IRA?

No single answer fits every household. A Traditional IRA defers tax but forces RMDs. A Roth IRA has no lifetime RMD for the original owner and tax-free qualified withdrawals. Current bracket, expected future bracket, Medicare exposure, and estate goals decide the split.

6. What happens when an RMD is missed?

The IRS charges an excise tax of 25% of the amount not withdrawn. The tax falls to 10% when the shortfall is withdrawn and the return is corrected within the correction window. A waiver request based on reasonable cause can be filed with Form 5329.

Useful Resources

Conclusion: Dividends and RMDs Belong in One Plan

Dividends and RMDs report on the same tax return and feed the same income total. A brokerage account that pays qualified dividends at 0% to 15% looks inexpensive on its own, but an RMD stacked on top can push ordinary income into a higher bracket, raise the taxable share of Social Security to the 85% cap, and cross a Medicare surcharge line two years later.

The workable approach is to project income across all accounts before the year ends, use QCDs where charitable giving is already planned, convert to Roth in lower-income years, and hold cash for spending during market declines. Rules, thresholds, and premiums change every year, so the figures in this article need checking against IRS and Medicare publications before any decision.

Reader Questions

How are dividend holdings being coordinated with Traditional IRA RMDs in a retirement plan? Is Medicare IRMAA part of the withdrawal planning? Comments are open below.

About this publication: The Dividend Stacker is a US-focused dividend investing publication. It is not a licensed financial advisor, and the content is educational. Articles draw on US tax law, SEC filings, and dividend history.

Disclaimer: This article is for educational purposes only and reflects rules in effect as of November 3, 2026. It does not provide tax, legal, financial, investment, Medicare, Social Security, or estate-planning advice. No investment result, tax outcome, or dividend payment is guaranteed. The 2027 Medicare Part B premium and IRMAA brackets had not been finalized by CMS at the time of writing. Tax laws, RMD rules, income thresholds, and Medicare premiums change. Official guidance is available at IRS.gov, SSA.gov, Medicare.gov, and SEC.gov. A licensed CPA, enrolled agent, tax attorney, or certified financial planner should be consulted before acting on retirement distributions, tax planning, or investment accounts.

References

Internal Revenue Service. "Retirement Topics: Required Minimum Distributions (RMDs)." irs.gov
Internal Revenue Service. "Publication 550, Investment Income and Expenses." irs.gov/publications/p550
Internal Revenue Service. "Retirement Topics: Beneficiary." irs.gov
Internal Revenue Service. "Publication 915, Social Security and Equivalent Railroad Retirement Benefits." irs.gov/publications/p915
Social Security Administration. "Medicare Premiums: Rules for Higher-Income Beneficiaries." ssa.gov
Internal Revenue Service. "Roth IRAs." irs.gov/retirement-plans/roth-iras
Internal Revenue Service. "Topic No. 559, Net Investment Income Tax." irs.gov/taxtopics/tc559
California Franchise Tax Board. "Personal Income Tax." ftb.ca.gov
Internal Revenue Service. "Revenue Procedure 2025-32" (2026 inflation adjustments). irs.gov
Internal Revenue Service. "Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs)." irs.gov/publications/p590b
Medicare.gov. "Medicare Costs." medicare.gov
Internal Revenue Service. "Publication 6142, Additional Deduction for Seniors." irs.gov
Internal Revenue Service. "Notice 2025-67, 2026 Limitations Adjusted for Cost-of-Living Increases" (includes the $111,000 QCD limit). irs.gov

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