If you turned 73 this year and have a traditional IRA or 401(k), the IRS expects a slice of that money whether you need it or not.
That's the required minimum distribution, or RMD, and skipping it can trigger a penalty that quietly eats into your retirement savings.
Here's the part that trips people up: the penalty for missing an RMD is now 25% of the amount you should have withdrawn, down from the old 50% under the SECURE 2.0 Act.
Withdraw the shortfall within a specific correction window, and it can drop to 10%.
Still, that's real money vanishing for a paperwork miss.
The math matters more than ever because more Americans are hitting RMD age with larger balances.
If your IRA finished last year at $500,000 and the IRS divisor for your age is roughly 26.5, your required withdrawal lands near $18,900.
That's not optional income — it's taxable income, and it can push you into a higher bracket or raise your Medicare premium two years later.
You generally must take your RMD by December 31 each year.
Miss that date and you're in penalty territory.
The one exception is your very first RMD, which you can delay until April 1 of the following year — but do that and you'll stack two taxable withdrawals into a single tax year, which can hurt more than it helps.
Not every account follows the same clock.
Roth IRAs have no lifetime RMDs for the original owner, which is why they're a favorite for estate planning.
But a Roth 401(k) does require withdrawals during your lifetime unless you roll it into a Roth IRA.
Workplace plans like 401(k)s and 403(b)s also allow a "still working" exception if you're not a 5% owner, though that grace period doesn't apply to traditional IRAs.
Most non-spouse beneficiaries now must drain an inherited IRA within 10 years under the SECURE Act, and some of those years require distributions along the way.
The IRS has been phasing in enforcement, so heirs who assumed they could wait until year ten are getting unpleasant letters.
For married couples, a spousal heir gets more flexibility and can often stretch payments over their own lifetime.
That difference alone can shift thousands of dollars in taxes between two families with identical balances.
First, confirm your exact RMD with your custodian rather than a back-of-the-napkin estimate.
Second, consider taking it early in the year so you're not scrambling in December.
Third, if you don't need the cash, look at a qualified charitable distribution — routing up to $105,000 directly to charity can satisfy the RMD while keeping it out of your taxable income.
And if you've already missed one, don't panic and don't ignore it.
File Form 5329, explain the reason, and request a waiver.
The IRS grants them more often than people expect when the mistake was honest.
Our take: RMDs are less a tax trap than a planning deadline most people discover too late.
Final Thoughts
The retirees who come out ahead aren't the ones with the biggest accounts — they're the ones who mapped the withdrawals years in advance and treated the December 31 date like a bill that never forgives.