If you turned 73 in 2025, the IRS has a message that lands like an uninvited guest: start pulling money out of your retirement accounts, whether you need it or not.
Required minimum distributions, or RMDs, force retirees to withdraw a set amount from traditional IRAs and 401(k)s every year.
Miss it, and the penalty is 25% of whatever you should have taken — dropping to 10% only if you correct it quickly.
Here's the part that catches people off guard.
RMDs aren't a suggestion, and the IRS doesn't care that you'd rather leave the money growing.
The rule now kicks in at age 73, thanks to the SECURE 2.0 Act.
If you hit that birthday this year, your first deadline can actually stretch to April 1 of next year — but that creates a sneaky trap worth understanding.
Take the delay and you'll owe two distributions in the same calendar year — one for 2025 and one for 2026.
That double dip can shove you into a higher tax bracket, inflate your Medicare premiums two years later, and even trigger extra taxes on your Social Security benefits.
For a lot of households, that one timing decision costs more than the distribution itself.
The size of your check depends on your account balance and your life expectancy factor from an IRS table.
A rough rule of thumb: divide your Dec. 31 balance by roughly 26 if you're 73.
On a $500,000 IRA, that's about $19,230 you're required to move — and the IRS treats it as ordinary income.
There's no special rate, no grace period, no way around it for traditional accounts.
Where people lose real money is in the details.
Many retirees with multiple IRAs think they must withdraw separately from each one.
You can take the total from any single IRA or combination, as long as the combined sum matches what you owe.
But 401(k)s work differently — each plan stands alone, and you can't pool them with your IRAs.
Get that wrong and you're looking at penalties on money you technically already withdrew.
One clean fix is a qualified charitable distribution.
Once you're 70½, you can send up to $108,000 directly from an IRA to a charity.
It counts toward your RMD but never shows up as income on your tax return.
For retirees who don't need the cash, this can shrink the tax hit and keep Medicare surcharges at bay.
Automatic withdrawals are your safety net.
Most brokerages will calculate and schedule your RMD if you ask, which beats realizing in December that you forgot.
The people who get burned are usually the ones who assume their advisor is handling it — or who simply don't know the clock started ticking.
Worth knowing before year-end: the IRS finalized new tables a few years back that slightly lowered the percentages, but the direction is still up as you age.
Roth IRAs have no RMDs during your lifetime, which is why more savers are converting gradually.
The catch is that conversions themselves add to your taxable income the year you do them.
My take: RMDs aren't really a tax problem, they're a planning problem, and the fix usually lives a decade earlier than most people start looking.
Final Thoughts
If you're anywhere near 73, spend an afternoon with your account statements and a calculator — or a fee-only advisor — before the deadline does the deciding for you.