If you turned 73 this year, the IRS has a birthday present waiting: a mandatory withdrawal from your retirement accounts, whether you need the cash or not.
It's called a Required Minimum Distribution, or RMD, and it applies to traditional IRAs and most 401(k)s.
Miss it, and the penalty is steep — 25% of the amount you should have taken, dropping to 10% if you fix it fast.
The rule used to kick in at 70½, then 72, and now 73 under the SECURE 2.0 Act.
That delay sounds generous, but it also means larger account balances get squeezed into fewer years of required withdrawals — and bigger taxable hits per check.
The IRS divides your account balance by a life expectancy factor from its Uniform Lifetime Table.
At 73, that factor is 26.5, so a $500,000 IRA forces out about $18,868 for the year.
At 80, the factor drops to 20.2, pushing the same balance toward roughly $24,750.
The older you get, the larger the forced slice.
That withdrawn money lands on your tax return as ordinary income.
It can push you into a higher bracket, inflate what you pay for Medicare Part B and Part D through income-related monthly adjustment amounts, and even trigger taxes on Social Security benefits.
Retirees who saved diligently often feel punished for it.
Qualified Charitable Distributions let you send up to $105,000 per year directly from an IRA to a charity, and that amount counts toward your RMD without adding to taxable income.
You must be 70½ or older, and the check has to go straight to the charity — not through your hands first.
You can delay your very first RMD until April 1 of the following year, but then you'll owe two distributions in that same tax year.
Most advisors suggest taking the first one on schedule to avoid the double-up.
After that, every RMD is due by December 31.
You may be able to skip RMDs on your current employer's 401(k) if you don't own more than 5% of the business.
That exception does not apply to IRAs or to old 401(k)s from previous jobs.
Roth IRAs have no RMDs during your lifetime, which is a big reason they've become a favorite tool for estate planning.
But inherited accounts follow different rules, and non-spouse beneficiaries often face a 10-year window to empty them.
One more wrinkle: each IRA's RMD must be calculated separately, but you can take the total from any one or combination of them. 401(k)s don't allow that flexibility — each plan pays out on its own.
The practical move is to check your balance every January, run the numbers, and set a calendar reminder.
Brokerages usually calculate the amount for you, but the responsibility stays with you.
Automatic distributions can help, as long as you verify the figure.
Our take: RMDs aren't a penalty, but they can feel like one when a forced withdrawal bumps your Medicare premium or taxes more of your Social Security.
Planning withdrawals years ahead — Roth conversions, charitable distributions, partial conversions during low-income years — tends to beat scrambling in December.
Final Thoughts
Treat the deadline like a bill, because functionally, it is one.