If you turned 73 in 2025, the IRS expects its cut of your retirement account, and the grace period for a first-timer's mistake is already gone.
Required minimum distributions, or RMDs, are the mandatory withdrawals Uncle Sam forces on traditional IRAs and most workplace plans once you hit a certain age.
Skip them, and the penalty is 25% of the amount you should have pulled—dropping to 10% only if you fix it fast.
The pain point this year isn't the rule itself.
A rough 2022 market left many account balances lower going into the calculation, which means the dollar amount retirees must withdraw has swung in ways that don't match their old budgets.
Here's how the government decides what you owe yourself to withdraw.
The IRS takes your account balance from Dec. 31 of the prior year and divides it by a life-expectancy factor that shrinks as you age.
At 73, that divisor is about 26.5, so a $500,000 balance forces out roughly $18,900.
Hit 80 and the divisor drops near 20.2, pushing the same balance toward $24,750.
Two deadlines trip people up, and they are not the same.
Your very first RMD can be delayed until April 1 of the following year—but take that option and you'll stack two taxable withdrawals into a single tax season.
Every year after that, the money must be out by Dec. 31.
Miss the December date and you're staring at that 25% excise tax on top of ordinary income tax.
The wrinkle catching more households: not every account plays by the same clock.
If you're still working and your employer's 401(k) allows it, you may be able to skip RMDs on that specific plan until you actually retire.
That break does not extend to IRAs or to old 401(k)s from former jobs.
Roth IRAs never force withdrawals during the owner's lifetime, which is why they've become a favorite estate tool.
But Roth 401(k)s now follow the same no-RMD rule, thanks to changes that took effect in 2024—a detail plenty of savers still don't realize.
For high earners, the sting is the tax bracket creep.
A forced $20,000 withdrawal can push Social Security benefits into a more heavily taxed tier or trigger higher Medicare premium surcharges two years later.
That's why financial planners increasingly talk about "RMD smoothing"—deliberately draining traditional accounts in your 60s, before the government makes the choice for you.
If you can't use the cash, you don't have to spend it.
You can reinvest in a regular brokerage account, convert part of it to a Roth, or route up to $108,000 this year straight to charity through a qualified charitable distribution.
That last move can satisfy the RMD without adding a dime to your taxable income.
The honest takeaway: this isn't a tax on the wealthy or a punishment for saving.
It's a bill that arrives on a schedule you don't control, and the people who plan around it keep more of their money than the ones who get surprised in December.
Final Thoughts
Check your divisor, check your deadlines, and check whether your old 401(k) is quietly working against you.