If you turned 73 this year, the IRS has a message: it wants its cut, and the minimum amount you must pull from your retirement accounts just got a little bigger.
Required minimum distributions, or RMDs, are the annual withdrawals the government forces you to take from traditional IRAs, 401(k)s, and most other tax-deferred retirement accounts once you hit a certain age.
The rule exists because these accounts were never taxed on the way in — Uncle Sam wants his money eventually, and he's not willing to wait forever.
For 2025, the withdrawal math got more generous on paper.
Thanks to an inflation adjustment, the amount you're required to take out is calculated using updated life expectancy tables and account balances, which nudges the required percentage slightly.
In plain terms: balances are higher, thresholds are higher, and for many retirees the mandatory check is larger than last year's.
Here's the part that catches people off guard.
Miss an RMD, or take too little, and the penalty is brutal — a 25% excise tax on the amount you should have withdrawn.
That drops to 10% if you catch the mistake and correct it promptly.
Still, it's one of the harshest penalties in the tax code, and it's completely avoidable.
The SECURE 2.0 Act pushed the starting age to 73 for people born between 1951 and 1959, and to 75 for those born in 1960 or later.
If you're already taking distributions, nothing changes for you — but if you're approaching that birthday, the calendar matters more than most people realize.
One often-overlooked detail: you can delay your very first RMD until April 1 of the following year.
Take two distributions in one year and you may push yourself into a higher tax bracket, trigger higher Medicare premium surcharges, or increase the taxable portion of your Social Security.
Sometimes the "flexibility" costs more than it saves.
A few practical moves worth knowing: - You can satisfy RMDs from multiple IRAs by withdrawing the full amount from just one account.
This does not apply to 401(k)s — each workplace plan generally stands alone. - Qualified charitable distributions let you send up to $105,000 (indexed for 2024 and 2025) straight from an IRA to charity, counting toward your RMD while staying out of your taxable income. - Roth IRAs have no RMDs during the owner's lifetime, which is a big reason they're popular with retirees who don't need the cash.
The bottom line for households: this isn't free money, and it isn't optional.
It's a forced sale of your investments, timed by the government rather than by your own plans.
Whether RMDs are a burden or just a nuisance depends on how you've structured your retirement income.
For some, it's a chance to rebalance and cover expenses.
For others, it's an unwelcome tax bill arriving on a schedule they didn't choose.
Final Thoughts
Either way, the rule rewards people who plan ahead and punishes the ones who ignore the deadline.