If you turned 73 last year, the IRS is watching one specific box on your calendar.
It's called a required minimum distribution, or RMD, and it's the mandatory withdrawal you must take from most traditional retirement accounts once you hit a certain age.
Miss it, and the penalty is one of the steepest in the entire tax code.
Here's the part that trips people up: the penalty for skipping an RMD used to be 50% of the amount you should have withdrawn.
The SECURE 2.0 Act cut that to 25%, and it drops to 10% if you fix the mistake within a specific correction window.
That's still real money vanishing for a paperwork slip, not a bad investment.
The starting age moved from 72 to 73 for people who reached 72 after 2022, and it climbs to 75 in 2033.
That means millions of Americans are navigating a moving target, and plenty of them are learning about it the hard way when a letter arrives.
Because a record number of boomers are hitting the trigger age at the same time, and a lot of them hold accounts at multiple brokerages.
Each account has its own calculation, though you can usually consolidate withdrawals from similar IRA types.
Mess that up and you can accidentally under-withdraw.
You're allowed to delay your very first RMD until April 1 of the following year.
Sounds generous, until you realize that means taking two taxable withdrawals in the same calendar year, which can push you into a higher bracket and even affect Medicare premiums.
RMDs are taxed as ordinary income, and they don't care whether you need the cash.
If you've got a pension, Social Security, and a hefty 401(k), the forced withdrawal can stack income you never planned to touch.
Financial planners say this is why Roth conversions and charitable qualified distributions get so much attention in retirement planning circles.
Tax preparers, custodians, and the growing cottage industry of RMD calculators and advisory services.
The rules are genuinely complex, but a chunk of the anxiety is manufactured by firms selling peace of mind.
Your brokerage will often calculate the number for you free, and the IRS publishes worksheets.
The practical move is boring but effective.
Check your birth year against the current age threshold, confirm each account's year-end balance, and set a calendar reminder well before December 31.
If you've inherited an IRA, the rules are stricter and the deadlines differ, so don't assume your situation mirrors your neighbor's.
The penalty reduction was sold as relief, and it is, but it also quietly normalized the idea that this is easy to get wrong.
It isn't complicated on purpose, but it's complicated enough that a five-minute review each fall could save you thousands.
Final Thoughts
Do the boring check before the IRS does it for you.