Turning 73 now comes with a mandatory math problem.
Anyone with a traditional IRA, 401(k), or most other tax-deferred retirement accounts must start pulling money out each year under the IRS's Required Minimum Distribution rules — whether they need the cash or not.
That forced withdrawal is landing on millions of households at a moment when inflation has already stretched budgets thin.
The penalty for skipping it is one of the steepest in the tax code: 25% of the amount you should have withdrawn, dropping to 10% if corrected within a specific window.
Divide your account balance from the prior December 31 by an IRS life expectancy factor — currently about 26.5 at age 73.
A $500,000 balance means roughly $18,900 must come out that year.
As you age, the factor shrinks, so the required percentage grows, eventually exceeding 10% of the account annually.
Your first RMD can be delayed until April 1 of the year after you turn 73, but that creates a trap: taking two distributions in the same calendar year can push you into a higher tax bracket and trigger surcharges on Medicare premiums.
The rules also shifted for surviving spouses and some heirs after the SECURE Act and its 2024 follow-up.
Most non-spouse beneficiaries must now drain inherited accounts within 10 years, which can stack taxable income into a few brutal filing seasons.
For investors still working, the practical move is planning years ahead.
Converting portions of a traditional IRA to a Roth during low-income years reduces future RMDs, since Roth accounts carry no lifetime withdrawal requirement.
Pairing that with partial Roth conversions before age 73 is one of the few levers that shrinks the forced income later.
If you're already past the start date, set up automatic distributions with your custodian.
That kills the missed-payment penalty risk and spreads taxable income evenly rather than dumping it into December.
Charitably inclined retirees can send up to $105,000 per year directly to qualified charities via a QCD, which counts toward the RMD without adding to taxable income.
One more wrinkle: each account must be calculated separately, but you can usually aggregate withdrawals across multiple IRAs.
Workplace 401(k)s generally cannot be pooled that way and must be satisfied account by account.
Our take: the RMD deadline is one of the few retirement rules with a real financial sting attached, and it arrives on a fixed schedule whether your portfolio is up or down.
Final Thoughts
Building the withdrawal into a broader tax plan early — rather than scrambling in April — is the difference between a manageable obligation and an expensive surprise.