If you turned 73 last year, there's a good chance the IRS is already expecting a slice of your retirement account.
It's called a required minimum distribution, or RMD, and it's the amount you're legally forced to pull out of traditional IRAs and most workplace plans once you hit a certain age.
Miss that deadline, and the penalty is brutal.
The IRS charges 25% of whatever you should have withdrawn but didn't.
If you catch the mistake and fix it within a specific window, that penalty can drop to 10%.
Still, it's money that vanishes for no good reason.
Here's what's tripping people up in 2025.
The age to start RMDs is 73 if you were born between 1951 and 1959, and 75 if you were born in 1960 or later.
That second group gets extra years to plan, but everyone else needs to move.
The IRS publishes life expectancy tables, and you divide your account balance by a number based on your age.
So a $500,000 IRA means a first-year withdrawal of roughly $18,900.
At 80, the divisor drops to around 20.2, so the required slice gets bigger every year.
The real pain isn't the withdrawal itself.
That money comes out as ordinary income, which can bump you into a higher bracket, raise your Medicare Part B and Part D premiums two years later, and even make more of your Social Security taxable.
Retirees who also collect a pension or work part-time often get blindsided.
One of the most common mistakes is forgetting that each IRA has its own RMD.
You can't just take the total from one account and call it done.
You have to calculate it separately for every traditional IRA, though you can pool the withdrawals and take the money from whichever account you like.
Workplace plans like 401(k)s follow different rules and generally can't be combined.
Those don't require withdrawals during your lifetime.
But a Roth 401(k) does, unless your plan specifically allows you to skip them.
A few practical moves can soften the blow.
First, check whether you can do a qualified charitable distribution.
If you're 70½ or older, you can send up to $108,000 directly from your IRA to a charity, and it counts toward your RMD while staying out of your taxable income.
That's one of the few clean wins in the tax code.
Taking your RMD early in the year gives that money more time to work elsewhere and lets you plan around your bracket instead of scrambling in December.
Third, look at whether converting part of your traditional IRA to a Roth makes sense in a low-income year.
You'll pay tax now, but you shrink future RMDs and the tax drag that comes with them.
Finally, don't ignore the first-year rule.
Your very first RMD can be delayed until April 1 of the following year, but that means you'll take two distributions in the same tax year.
For many people, that pushes them into a higher bracket.
It's often smarter to take the first one on time.
The bottom line: RMDs aren't optional, and the IRS doesn't send reminders.
Set a calendar alert, confirm your account balance on December 31, and talk to a tax professional before the deadline sneaks up.
Final Thoughts
A little planning now beats handing Uncle Sam a penalty later.