If you turned 73 last year, the IRS is already expecting a check-in.
Required minimum distributions, or RMDs, force retirees to start pulling money out of traditional IRAs and 401(k)s once they hit a certain age — and the penalty for skipping one is one of the steepest in the tax code.
Here's the part that catches people off guard: the rule doesn't care whether you need the money.
You can be sitting on a perfectly comfortable pension and still owe the withdrawal.
The current starting age is 73 for anyone who reached 72 after 2022, and it climbs to 75 in 2033.
Miss a distribution and the IRS can take 25% of the amount you should have withdrawn, dropping to 10% if you fix it within a correction window.
That's a real bite out of a retirement account, and it's not a one-time fee if you keep forgetting.
Because traditional IRAs and 401(k)s are tax-deferred, not tax-free.
You got a deduction going in, and the government wants its cut eventually.
RMDs are the backstop that guarantees it.
Roth IRAs don't have RMDs during the owner's lifetime, which is one reason they've become popular with people planning for heirs.
The calculation itself isn't complicated, but it's easy to get wrong.
You divide your account balance as of December 31 of the prior year by a life expectancy factor from IRS tables.
The divisor shrinks as you age, so the required percentage grows.
Brokerages typically calculate this for you, but the responsibility is legally yours — not theirs.
There's a trap for people with multiple accounts.
If you have several traditional IRAs, you can usually take the total RMD from any one of them.
Each employer plan generally has to pay out its own RMD separately.
Mix those up and you can trigger a penalty on an account you thought you'd already covered.
You can delay your very first RMD until April 1 of the following year, but that means taking two distributions in the same tax year — which can shove you into a higher bracket and inflate your Medicare premiums two years later.
For most people, taking the first one on schedule is the simpler path.
Who actually benefits from all this confusion?
Custodians collect fees on assets, and tax preparers get billable hours untangling it.
The straightforward advice — automate the withdrawal, confirm the amount in writing, and check whether you hold an old 401(k) you forgot about — rarely generates headlines but solves most of the problem.
One more wrinkle: if your spouse is more than ten years younger, different tables apply, and the required amounts shrink.
If you inherited an IRA, the rules changed again under the SECURE Act, and some beneficiaries now face a ten-year window instead of stretching payments across their lifetime.
The penalty was reduced from 50% to 25% a few years back, which sounds generous until you realize a quarter of a mandatory withdrawal is still a lot of money to hand over for a paperwork miss. **The takeaway:** RMDs are less a retirement strategy than a tax collection mechanism, and the burden of compliance sits entirely with you.
Set a calendar reminder, verify the number with your custodian, and don't assume the institution is watching out for you.
Final Thoughts
Nobody is fined when you forget except you.