If you turned 73 this year, there's a paperwork deadline lurking that has nothing to do with taxes and everything to do with penalties.
It's called a required minimum distribution, or RMD, and it forces you to start pulling money out of traditional IRAs and most 401(k)s whether you need the cash or not.
Miss the deadline and the IRS can hit you with an excise tax on the amount you should have withdrawn.
Thanks to a 2022 law change, it's now 25%, and it drops to 10% if you fix the mistake quickly.
Still, that's real money vanishing for a form you forgot to file.
Anyone who reaches age 73 during the year generally must take their first RMD by April 1 of the following year.
After that, every subsequent withdrawal is due by December 31.
That first-year grace period is a classic trap: delay it, and you could be forced to take two distributions in the same calendar year, which can shove you into a higher tax bracket.
The IRS publishes life expectancy tables, and you divide your account balance by a factor based on your age.
At 73, that factor is about 26.5, so a $500,000 IRA would require roughly $18,900 out the door.
The older you get, the larger the percentage you're required to withdraw.
Roth IRAs don't require withdrawals during the owner's lifetime, but Roth 401(k)s do, at least under current rules.
If you have multiple traditional IRAs, you can total them up and take the RMD from just one account.
But 401(k)s work differently: each plan generally needs its own distribution.
And if your spouse is more than 10 years younger, special tables can shrink what you owe.
There's also a strategy angle worth knowing.
If you don't need the money, you can direct your RMD to a qualified charity through what's called a qualified charitable distribution.
Done right, that amount can satisfy your RMD and stay out of your taxable income entirely.
For retirees who already give to their church or a favorite nonprofit, it's often the single easiest tax move available.
The practical takeaway is simple: find out your deadline, check your account balance, and let your custodian calculate the number, since most brokerages do it automatically.
Set a calendar reminder for early December, not late December.
And if you've inherited an IRA from someone who wasn't your spouse, the rules tightened in recent years, so confirm your specific timeline rather than assuming.
Our take: this is one of the few retirement rules where ignorance carries a direct price tag, and the fix takes about ten minutes.
If you're near 73 or already past it, call your plan administrator this week and get the number in writing.
Final Thoughts
Your future self will thank you for skipping that penalty.