If you turned 73 this year, the IRS has a message that could reshape your retirement budget: it wants its cut of your tax-deferred accounts, and the deadline math is less forgiving than many people assume.
Required minimum distributions, or RMDs, are the mandatory withdrawals the government imposes on traditional IRAs and most workplace retirement plans once you hit a certain age.
The rules changed under the SECURE 2.0 Act, and the age that triggers your first withdrawal now depends on when you were born.
Anyone born between 1951 and 1959 starts at 73.
Those born in 1960 or later wait until 75.
That birthday rule trips up plenty of households.
Miss your first RMD and the penalty is steep: 25% of the amount you should have withdrawn, dropping to 10% if you correct it within a two-year window.
The old penalty was a brutal 50%, so the relief is real, but it is not a free pass.
The deadline itself is the detail that catches people off guard.
For your very first RMD, you can delay the withdrawal until April 1 of the following year.
Sounds generous, until you realize it means taking two taxable distributions in a single calendar year.
That double hit can push you into a higher bracket, spike your Medicare Part B and Part D premiums through income-related surcharges, and even affect how much of your Social Security benefits gets taxed.
For every year after the first, the deadline is December 31.
If the money has not left the account by year-end, the penalty clock starts ticking.
Here is where the planning gets interesting.
The IRS calculates your RMD by dividing your account balance at the prior year-end by a life expectancy factor from its Uniform Lifetime Table.
That divisor shrinks as you age, which means the percentage you must withdraw climbs steadily.
By your mid-80s, you could be pulling out well over 8% of the account each year whether you need the cash or not.
A few practical moves can soften the blow.
Qualified charitable distributions let you send up to $108,000 directly from an IRA to charity in 2025, and that amount counts toward your RMD without adding to your taxable income.
If you are still working and not a 5% owner of the business sponsoring your 401(k), you may be able to skip RMDs on that plan until you actually retire.
Roth IRAs carry no RMDs during your lifetime, which is a big part of why conversions get so much attention.
The most expensive mistake is simple neglect.
Brokerages do not always auto-liquidate, and if you hold multiple IRAs, each one has its own calculation even though you can satisfy the total from any combination of them.
For households already watching grocery bills and mortgage rates, an unexpected tax bill is the last thing they need.
Treat the RMD like any other fixed annual expense and calendar it now.
Our take: the RMD is not really a retirement rule, it is a tax-collection schedule dressed up as one.
The retirees who win are the ones who plan the withdrawal years in advance, not the ones who scramble in December.
Final Thoughts
Do the math early, and the IRS becomes a manageable line item instead of a January surprise.