That's the age when Required Minimum Distributions kick in for most retirement accounts, forcing you to withdraw a minimum amount from your 401(k) or traditional IRA every year — whether you need the cash or not.
Miss the deadline, and the penalty is 25% of what you should have taken.
Here's the part that trips people up: the rule applies to the account owner, not the account.
If you have three IRAs at three different brokerages, you don't get three separate deadlines.
You calculate the total RMD across all of them and can take it from any one.
But 401(k)s don't work that way — each workplace plan stands alone, and you can't shuffle withdrawals between them.
The math isn't mysterious, but it catches people off guard.
You divide your account balance from the prior December 31 by a life expectancy factor the IRS publishes each year.
A 73-year-old typically uses a factor around 26.5, which works out to roughly 3.8% of the balance.
By 85, that factor drops to about 16, pushing the required percentage past 6%.
The older you get, the larger the forced bite.
For many retirees, the real headache is tax timing.
RMDs count as ordinary income, which can bump you into a higher bracket, inflate your Medicare Part B and Part D premiums two years later, and make more of your Social Security taxable.
Someone who spent decades saving in a pre-tax account can find that the withdrawal itself triggers a chain of costs they never modeled.
There are a few legitimate ways to soften the blow.
Qualified charitable distributions let you send up to $108,000 directly from an IRA to charity in 2025, and that amount counts toward your RMD without adding to taxable income.
Roth conversions before RMD age shrink future required amounts, though they create their own tax bill upfront.
And if you're still working past 73, you may be able to delay RMDs on your current employer's 401(k) — but not on an old employer's plan or any IRA.
The first-year deadline deserves special attention.
If you turn 73 in 2025, you can delay your first withdrawal until April 1, 2026.
That sounds like a gift, but it means taking two distributions in the same calendar year — one for 2025 and one for 2026 — which can stack income into a single tax year and push you into a bracket you'd otherwise avoid.
Most advisors suggest taking that first RMD on time rather than doubling up.
The penalty for skipping an RMD is 25% of the shortfall, dropping to 10% if you fix it within a correction window.
Custodians often calculate the amount for you, but the responsibility for taking it stays with you.
If you hold accounts at multiple firms, no single one sees the whole picture.
Spouses can roll inherited accounts into their own and follow the standard rules.
Most other heirs now fall under the 10-year rule, which requires emptying the inherited account within a decade — and in many cases, taking annual distributions along the way.
The bottom line: RMDs aren't a retirement detail you can ignore until tax season.
Final Thoughts
They're a deadline with teeth, and the people who plan around them a year or two early tend to keep more of their money.