If you turned 73 last year and haven't touched your IRA, the IRS is already keeping score.
Required Minimum Distributions, or RMDs, force retirees to withdraw a minimum amount from tax-deferred accounts each year once they hit a certain age — and miss the deadline, and the penalty is one of the harshest in the tax code.
Here's what changed: the SECURE 2.0 Act pushed the starting age to 73 for anyone born between 1951 and 1959, and to 75 for those born in 1960 or later.
That two-year gap has created real confusion, because two people born just a few years apart now face completely different deadlines.
The math matters more than most people realize.
RMDs are calculated by dividing your account balance at the end of the prior year by a life expectancy factor from IRS tables.
At 73, that factor is roughly 26.5, meaning you'd need to withdraw about 3.8% of your balance.
The older you get, the larger the forced slice — whether you need the cash or not.
Miss the deadline, and the penalty is 25% of the amount you should have withdrawn.
That drops to 10% if you correct it within a two-year window, but it's still money gone for a paperwork mistake.
The deadline for most accounts is December 31 each year.
Your very first RMD gets a grace period into April of the following year — but take it then and you'll owe two withdrawals in the same tax year, which can shove you into a higher bracket.
A large RMD can push your income above thresholds that trigger higher Medicare premiums, taxation of Social Security benefits, or the net investment income tax.
For higher earners, the smart move is often a Qualified Charitable Distribution — sending up to $105,000 directly from an IRA to charity counts toward your RMD and stays out of your taxable income entirely.
If your employer plan is a 401(k) and you don't own more than 5% of the business, you may be able to delay RMDs until you actually retire.
That exception does not apply to traditional IRAs.
Roth IRAs have no RMDs during the owner's lifetime, which is a big part of why conversions remain popular.
But inherited accounts follow different rules, and the IRS has spent years tightening them.
The practical takeaway: check your birth year, check your account balance, and mark December 31 on your calendar.
Automate the withdrawal if your custodian allows it.
Then run a quick tax projection before the end of the year, because the withdrawal itself is only half the story — what it does to your bracket, your Medicare premium, and your Social Security taxation is the other half. **Our take:** RMDs aren't a penalty, they're a scheduling problem — and most retirees treat them like a surprise rather than a line item.
The investors who plan withdrawals years in advance, using Roth conversions and charitable distributions to smooth the tax hit, keep far more of their money than those who scramble every December.
Final Thoughts
If you're within five years of 73, this is worth an hour with a tax professional.