RMAN-06429: TARGET database is not compatible with this version of RMAN

Whenever you connect to a database (rman version if different from source database version in fact rman version is higher than the source database) through RMAN using/without recovery catalog it fails with RMAN-06429: TARGET database is not compatible with this version of RMAN as below.

C:\>rman target rman/rman@local2 catalog rman/rman@testdb

Recovery Manager: Release 10.2.0.1.0 - Production on Tue Mar 24 05:07:14 2009

Copyright (c) 1982, 2005, Oracle. All rights reserved.

Recovery Manager incompatible with TARGET database: RMAN 8.0.4.0 to 10.1.0.0 req
uired
RMAN-00571: ===========================================================
RMAN-00569: =============== ERROR MESSAGE STACK FOLLOWS ===============
RMAN-00571: ===========================================================
RMAN-00554: initialization of internal recovery manager package failed
RMAN-06429: TARGET database is not compatible with this version of RMAN

Cause of the Problem
You have higher RMAN version than the target database (to which you are connecting). In order to successfully connect to database by rman the rman version must be less or equal to the target database version.

Solution of the Problem
There is a rule of thumb in this connecting issue and it is best practice to use 'rule of thumb'. That is "always use the target database RMAN executable and the latest release of Oracle for your recovery catalog."

However, if you are going to use a lower version RMAN executable to backup higher
version databases then remember you are restricted to only the features available
in the database your using. But the executable you are using must be able to
handle the feature or configuration you are using.

In the above example a 10.2.0.1 rman executable tried to connect to database version 10.1.0.2 which is not supported. If we follow rule of thumb then also use 10.1.0.2 rman executable to connect to database 10.1.0.2 in order to best use of all the available features. However we can connect to 10.1.0.2 database with lower version of rman executable but that is not recommended as in that case we might be restricted to use less features.

One more thing is clear from the error message is,
"Recovery Manager incompatible with TARGET database: RMAN 8.0.4.0 to 10.1.0.0
required". So you can use any rman executable to connect to target database (which- the target database in fact 10.1g) but current RMAN executable is shown as 10.2.0.1.