If you turned 73 this year, the IRS has a message for you: it wants its cut of your retirement account, whether you need the money or not.
It's called a required minimum distribution, or RMD.
Once you hit that age, you can no longer leave your traditional 401(k) or IRA untouched.
The government forces you to withdraw a minimum amount every year and pay income tax on it.
Miss the deadline, and the penalty is steep — 25% of what you should have taken, dropping to 10% if you fix it quickly.
The rule exists because these accounts were built with pre-tax dollars.
You got the deduction going in, so Washington wants the taxes coming out.
Roth IRAs are the exception — no RMDs during your lifetime, which is a big reason they've become so popular.
Here's the part that trips people up: you don't have to spend the money.
You just have to move it out of the tax-deferred account.
You can park it in a regular brokerage account, a savings account, or your checking account.
The withdrawal is what triggers the tax, not the spending.
The math depends on your age and your balance.
The IRS uses a life expectancy table, so the percentage you must pull rises each year.
At 73, it's roughly 3.8% of your account value.
The formula is simple: divide your December 31 balance from the prior year by the factor for your age.
Your first deadline is April 1 of the year after you turn 73.
Every year after that, the deadline is December 31.
That first-year grace period sounds generous, but it can backfire — wait until April and you'll take two distributions in the same calendar year, which can push you into a higher bracket or trigger higher Medicare premiums.
The Medicare piece catches retirees off guard.
Your Part B and Part D premiums are based on income from two years prior.
A large RMD can bump you into an income-related monthly adjustment amount, adding hundreds of dollars to your premiums.
If you're still working and contributing to a 401(k) at your current employer, you may be able to delay RMDs from that specific plan until you retire.
If you're charitably inclined, a qualified charitable distribution lets you send up to $105,000 directly from your IRA to a charity, and that amount counts toward your RMD without adding to your taxable income.
If you have several IRAs, you can take the total RMD from one account or split it up.
But 401(k) accounts each have their own RMD — you can't consolidate those.
The takeaway: this isn't a rule you can ignore and hope the IRS forgets.
Set a calendar reminder, check your balance each January, and talk to a tax professional before the deadline sneaks up.
A little planning now beats a penalty letter later.
For most retirees, the smartest move is to treat the RMD as a scheduled event, not a surprise.
Final Thoughts
Automate it, withhold taxes from the distribution if that's easier, and revisit the plan every year as the percentage climbs.