If you turned 73 in 2024, the IRS expects you to pull a chunk of money out of your retirement accounts before December 31 — whether you need the cash or not.
Miss that deadline and the penalty is 25% of the amount you should have withdrawn, dropping to 10% if you fix it within a two-year correction window.
This is the required minimum distribution, or RMD, and it catches people off guard every single year.
After decades of being told to let retirement money grow untouched, the rules flip.
Once you hit your RMD age, the government wants its tax cut, and it wants it on a schedule.
Your account custodian — Fidelity, Vanguard, Schwab, whoever holds your IRA or 401(k) — typically calculates the number for you and sends a statement.
The formula divides your December 31 balance from the prior year by a life expectancy factor the IRS publishes.
On a $500,000 IRA at age 73, that works out to roughly $18,900 you'd need to withdraw for the year.
The RMD applies to traditional IRAs, most 401(k)s, 403(b)s, and similar pre-tax accounts.
Roth IRAs don't require withdrawals during your lifetime.
But if you have several traditional IRAs, you can't just pull the total from one account — each one has its own calculation, though you're allowed to take the combined amount from any single IRA.
Workplace 401(k)s are stricter: each plan stands alone.
Your very first RMD can be delayed until April 1 of the following year.
Sounds like a gift until you realize you'd then take two taxable withdrawals in the same calendar year, possibly pushing you into a higher bracket or triggering higher Medicare premium surcharges two years later.
A few things worth doing now, while there's still time.
Check whether you've already satisfied the requirement — many people set up automatic distributions and forget.
Confirm the amount with your custodian in writing rather than eyeballing it.
And if you don't need the money, consider a qualified charitable distribution, which lets you send up to $105,000 directly to charity and count it toward your RMD without adding to your taxable income.
For anyone still working past 73, there's a narrow exception: you may be able to skip RMDs in your current employer's 401(k) if you don't own more than 5% of the business.
The broader takeaway is that retirement accounts stop being a solo project at 73.
They become a shared arrangement with the tax code, and the paperwork matters as much as the balance.
Our take: this is one of the few deadlines where ignoring it costs you real money, and the fix is usually a ten-minute phone call.
If you're anywhere near 73, call your custodian this week and get the number in writing.
Final Thoughts
Waiting until December invites a penalty that's entirely avoidable.