Turning 73 comes with a paperwork surprise that many retirees don't see coming.
Once you hit that age, the IRS requires you to start pulling money out of most traditional retirement accounts every single year — whether you need the cash or not.
Miss the deadline, and the penalty is brutal: 25% of the amount you should have withdrawn, dropping to 10% only if you fix it quickly.
The rule covers traditional IRAs, 401(k)s, 403(b)s, and most other tax-deferred accounts.
Roth IRAs are the big exception — they don't require withdrawals during the owner's lifetime.
If you turned 73 in 2024 or later, that's your starting point.
Anyone who hit 72 before 2023 fell under the older rules.
Here's what trips people up: your first withdrawal has a special grace period.
You can delay it until April 1 of the year after you turn 73.
Take two distributions in the same calendar year and you may get pushed into a higher tax bracket, which can also raise your Medicare Part B and Part D premiums two years down the road.
The math itself depends on your account balance and a life expectancy factor the IRS publishes each year.
A common shortcut is the "uniform lifetime table," which starts around 26.5 years for a 73-year-old.
Divide your Dec. 31 balance by that number and you have your minimum.
A $500,000 IRA at 73 works out to roughly $18,900 for the year.
Selling investments to satisfy the requirement is fine, but some retirees forget that the withdrawal is taxable income.
An easy fix is a qualified charitable distribution — sending up to $105,000 per year directly from your IRA to a qualified charity.
That amount counts toward your RMD but never shows up as income.
If you're still working and contributing to a 401(k) at your current employer, you may be able to skip RMDs on that specific plan.
That exception doesn't apply to IRAs or to old 401(k)s from former jobs.
Many people consolidate those old accounts without realizing it triggers RMDs on money they'd rather leave alone.
A few practical moves can soften the blow.
Consider converting part of a traditional IRA to a Roth during low-income years before RMDs begin.
You'll pay tax now, but future growth won't be forced out.
Checking your beneficiary designations also matters — a surviving spouse can often roll the account over and delay their own RMDs, while non-spouse heirs now face a 10-year withdrawal window under current rules.
Automatic distributions are the simplest safeguard.
Most brokerages will set one up so the money moves on schedule and you never scramble in December.
Just confirm the amount each year, since balances and IRS tables shift.
The takeaway here is that an RMD isn't a suggestion or a formality — it's a deadline with real teeth.
Final Thoughts
A few minutes spent reviewing your accounts each January can spare you a five-figure penalty and a very unpleasant letter from the IRS.