If you turned 73 this year and have a traditional IRA or 401(k), the government wants its cut.
That's the required minimum distribution, or RMD, and it's one of the few retirement rules you can't ignore without paying for it.
Here's the part most people missed: a 2023 rule change pushed the starting age from 72 to 73, and it's set to climb to 75 in 2033.
Whether that's a gift or a trap depends on your bracket, your health, and how long you think you'll live.
The IRS isn't doing you a favor out of generosity.
It's collecting deferred taxes it let you skip for decades.
Divide your account balance as of December 31 of the prior year by a life expectancy factor the IRS publishes.
A 73-year-old uses roughly 26.5, so a $500,000 IRA means about $18,900 must come out.
Miss that deadline and the penalty is 25% of the shortfall — dropped to 10% if you fix it within a two-year window.
The softening tells you something: enough people were tripping over this rule that Congress decided the punishment was harvesting anger instead of revenue.
You can delay your very first RMD until April 1 of the following year.
Do that and you'll take two distributions in one tax year, which can shove you into a higher bracket, inflate your Medicare premiums through IRMAA surcharges, and potentially trigger taxes on Social Security benefits.
If you have multiple IRAs, you can total the RMDs and pull the whole amount from one account.
That flexibility does not extend to 401(k)s, which must be calculated and withdrawn separately from each plan.
For anyone still working past 73, there's a narrow escape hatch.
If your current employer's 401(k) allows it and you don't own more than 5% of the business, you can skip RMDs on that plan.
The Roth IRA is the clean exception — no RMDs during your lifetime.
But inherited Roth accounts now fall under the 10-year payout rule for most non-spouse beneficiaries, so the tax-free ride has an expiration date.
That 10-year rule is where estate plans quietly fall apart.
The old "stretch IRA" let heirs draw payments over their own lifetimes.
Now most adult children must empty the account within a decade, often during their peak earning years.
Financial planners are recommending Roth conversions during low-income gap years to blunt the blow, but conversions cost taxes upfront and don't pay off if you die before the math works.
The real question isn't how to avoid RMDs.
It's whether you've planned the tax hit or whether it's going to ambush you in April.
Our take: this is a tax-collection schedule dressed up as a retirement rule, and the softer penalty exists because compliance was a mess, not because Washington got kinder.
If you're anywhere near 73, talk to a tax professional before December, not after.
Final Thoughts
The IRS will wait patiently for its money — but the surcharge on your Medicare premium won't.