If you turned 73 this year, the IRS has a birthday present waiting — and it comes with a penalty if you ignore it.
It's called a required minimum distribution, or RMD, and it's the amount you're forced to withdraw from most retirement accounts once you hit a certain age.
Miss it, and the government takes 25% of whatever you should have pulled out.
In some cases the penalty can drop to 10% if you fix it fast, but the default hit is brutal.
Here's the part that trips people up: your first RMD isn't due by December 31 of the year you turn 73.
You actually get a grace period until April 1 of the following year.
Sounds generous — until you realize that if you wait, you'll be forced to take two withdrawals in the same calendar year.
That can shove you into a higher tax bracket and inflate your Medicare premiums two years later.
The accounts covered include traditional IRAs, 401(k)s, 403(b)s, and most workplace plans.
Roth IRAs are exempt while you're alive, which is one reason they've become the go-to tool for estate planners.
If you're still working and own less than 5% of your employer, you may be able to delay RMDs on that specific 401(k) until you actually retire.
The math on how much you must withdraw changes every year.
You divide your account balance as of December 31 of the prior year by a life expectancy factor the IRS publishes in its Uniform Lifetime Table.
At 73, that factor is 26.5 — meaning you'd pull roughly 3.8% of the balance.
By your mid-80s, the percentage climbs past 6%.
That means a rough market year cuts both ways.
Your balance drops, so your required withdrawal shrinks — but so does the pile you're drawing from.
A few practical moves financial planners keep repeating this year: automate the withdrawal so you can't forget, check whether you're holding multiple IRAs (each one needs its own calculation, though you can take the total from any single one), and consider a qualified charitable distribution if you don't need the cash.
Sending up to $105,000 directly to charity can satisfy your RMD without adding a dollar to your taxable income.
One more wrinkle worth knowing: if your spouse is more than 10 years younger, different tables apply, and the numbers work in your favor.
Same story for certain beneficiaries, though the rules tightened under the SECURE Act and most non-spouse heirs now face a 10-year window to empty an inherited account.
The deadline doesn't care about your vacation schedule, a hospital stay, or a broker who forgot to call.
Set a calendar reminder now, verify the amount with your custodian, and confirm the withdrawal cleared before year-end. **Our take:** The RMD rule isn't designed to punish retirees — it's the government finally collecting tax on money it let grow untaxed for decades.
But the penalty is steep enough that treating this as a "someday" task is a real risk.
Final Thoughts
Ten minutes with your account statements this month could save you thousands.