If you turned 73 last year, the IRS is now expecting a check-in.
Required minimum distributions, or RMDs, force retirees to pull money out of traditional 401(k)s and IRAs once they hit a certain age.
Skip it, and the penalty is one of the harshest in the tax code.
Here is the part that catches people off guard.
It is a mandatory withdrawal the government taxes as ordinary income, whether you need the cash or not.
That can push you into a higher bracket, bump up your Medicare premium, and even trigger taxes on your Social Security benefits.
The age rules shifted recently, which is why so many households are confused.
Anyone who reached 72 after 2022 generally starts at 73.
Those born in 1960 or later wait until 75.
If you are already taking distributions, you keep going.
Miss the deadline and the IRS can hit you with a 25% excise tax on the amount you should have withdrawn.
The IRS divides your account balance by a life expectancy factor from a published table.
At 73, that factor is about 26.5, so a $500,000 balance means roughly $18,900 must come out.
At 80, the factor drops to about 20.2, so the required slice grows even if the balance stays flat.
As you age, the government demands a bigger share each year, and a rough market can force you to sell investments at the worst possible moment.
Financial planners call this sequence risk, and it is why some retirees move money into Roth accounts earlier, when their tax rate is lower.
You generally must take your first RMD by April 1 of the year after you turn 73.
Every year after that, the money has to be out by December 31.
Miss that December date and there is no grace period.
If you have several IRAs, you can total the required amounts and pull the whole thing from one account.
That flexibility does not apply to 401(k)s, which must be handled plan by plan.
And if your spouse is more than 10 years younger, special tables can shrink what you owe.
A simple calendar reminder can save you thousands.
Set it for early December, confirm the number with your custodian, and double-check that the withdrawal actually cleared before year-end.
Our take: RMDs are less a retirement perk than a scheduled tax payment, and treating them that way removes the shock.
If you are near the age cutoff, a 30-minute call with a tax professional is cheaper than the penalty.
Final Thoughts
Plan the withdrawal in a down market instead of panicking into one.