If you turned 73 last year, the IRS is watching a specific account you probably haven't thought about since you opened it.
Required minimum distributions, or RMDs, force retirees to withdraw a minimum amount from tax-deferred accounts like traditional IRAs and 401(k)s each year — and the penalty for skipping it is one of the harshest in the tax code.
Miss the deadline and the IRS can take 25% of the amount you should have withdrawn.
That drops to 10% only if you correct the mistake quickly.
On a $20,000 missed distribution, that's up to $5,000 gone for a paperwork error.
The rules changed under the SECURE 2.0 Act, and the confusion is real.
The starting age moved from 72 to 73 for people born between 1951 and 1959, then to 75 for those born in 1960 or later.
Many retirees are still operating on outdated information from a few years ago.
The deadline matters just as much as the amount.
Your first RMD is due by April 1 of the year after you turn 73.
Every year after that, it's due by December 31.
Take that first-year delay and you'll double up distributions in a single tax year — potentially pushing yourself into a higher bracket and increasing what you owe on Medicare premiums.
Here's the part that catches people off guard: the deadline for your first RMD has already passed for anyone who turned 73 in 2024.
If you missed it, the penalty clock is running, though you can still file Form 5329 and request a waiver if you have a reasonable excuse.
Calculating the amount isn't optional guesswork.
The IRS uses life expectancy tables, and your account custodian — Fidelity, Vanguard, Schwab, whoever holds the money — typically calculates it for you.
But the responsibility lands on you, not them.
If they get it wrong, you still owe the penalty.
Some accounts aren't subject to RMDs at all.
Roth IRAs have no lifetime distribution requirement, which is a major reason they're popular for estate planning.
But Roth 401(k)s do require withdrawals, at least until 2024 rules let employers eliminate them starting this year.
If you're still working and not a 5% owner of the business, your current employer's 401(k) may also be exempt.
For households already stretched by grocery bills and rising premiums, a surprise tax hit lands hard.
A missed RMD can also trigger an unexpected tax bill in April on money you never touched.
That's the trap — the IRS taxes the withdrawal whether or not you actually needed the cash.
One practical move: set up automatic distributions with your custodian so the deadline can't slip past you.
Another: 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 while keeping it out of taxable income.
This isn't a rule you can ignore and fix later without cost.
Check your birth year, confirm your account type, and verify your custodian has the right distribution scheduled.
A 20-minute call now beats a five-figure penalty later.
For a rule that's been around for decades, the RMD still manages to surprise the people it targets most.
Final Thoughts
The fix is boring and administrative, which is exactly why so many retirees put it off — and exactly why it keeps generating penalties.