If you turned 73 this year, the IRS has a message for you: it wants its cut of your retirement account.
Required minimum distributions, or RMDs, are the mandatory withdrawals you must take from traditional IRAs and most workplace retirement plans once you hit a certain age.
The rule applies to 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.
The age trigger moved to 73 starting in 2023, and it's scheduled to rise to 75 in 2033.
The IRS divides your account balance by a life expectancy factor from its Uniform Lifetime Table.
At 73, that factor is about 26.5, so a $500,000 balance means an RMD of roughly $18,900.
Skip it, and the IRS can hit you with a 25% excise tax on the amount you should have withdrawn — dropping to 10% if you fix it quickly.
The deadline matters more than people realize.
Your first RMD is due by April 1 of the year after you turn 73.
After that, every withdrawal is due by December 31.
That first-year grace period sounds generous, but it can backfire: if you delay, you'll take two distributions in the same tax year, which can push you into a higher bracket and inflate your Medicare premiums.
They can ripple through your tax return in ways that surprise retirees.
A larger withdrawal can trigger taxes on Social Security benefits, raise your Medicare Part B and Part D premiums through income-related monthly adjustment amounts, and reduce certain deductions.
For higher earners, it's worth running the numbers before December, not after.
If you have multiple traditional IRAs, you can total the RMDs and take the money from whichever accounts you like.
But 401(k)s and 403(b)s must each be calculated and withdrawn separately.
Qualified charitable distributions let you send up to $105,000 per year directly from an IRA to charity, and that amount counts toward your RMD without adding to your taxable income.
Converting part of a traditional IRA to a Roth in a low-income year can shrink future RMDs.
And if you're still working past 73, you may be able to delay RMDs on your current employer's 401(k), depending on your ownership stake.
The takeaway is simple: RMDs are not optional, and the penalties are real.
Check your balance, know your factor, and mark the calendar.
A short conversation with a tax pro in the fall can save you thousands compared to scrambling in April.
The people who get hurt most by RMDs are the ones who never planned for them.
Final Thoughts
Treat the withdrawal as a scheduled expense, not a surprise, and the tax bite stays manageable.