If you turned 73 this year, the IRS has a message: start pulling money out of your retirement accounts, or pay a penalty.
Required minimum distributions, or RMDs, are mandatory withdrawals from tax-deferred accounts like traditional IRAs and 401(k)s.
Miss one, and the penalty is 25% of the amount you should have taken — dropping to 10% only if you fix it quickly.
The rules shifted under the SECURE 2.0 Act.
The starting age moved to 73 for people who turned 72 after 2022, and it climbs to 75 in 2033.
If you hit 73 in 2024 or later, that's your trigger year.
Roth IRAs are exempt during your lifetime, but Roth 401(k)s are not — a detail plenty of retirees get wrong.
Your RMD is calculated by dividing your account balance at the end of the prior year by a life expectancy factor from IRS tables.
Markets rose in 2023 and 2024, which means balances are higher and so are the forced withdrawals.
If you don't actually need the cash, you're still taxed on it.
Suppose your RMD was $20,000 and you skipped it entirely.
File the right paperwork and take the money fast, and the IRS can reduce it to $2,000.
The agency has been automatic about waivers in recent years, but you still have to ask.
You can delay your very first RMD until April 1 of the following year — but then you'll take two in the same tax year, which can push you into a higher bracket and inflate your Medicare premiums two years later.
Most financial planners say just take the first one on time.
If you're still working and your 401(k) is at your current employer, you may qualify to skip RMDs from that plan until you retire.
That exception does not apply to IRAs, and it doesn't cover old 401(k)s from former jobs.
One workaround worth knowing: qualified charitable distributions.
Once you're 70½, you can send up to $105,000 per year directly from an IRA to a charity.
It counts toward your RMD but never shows up as taxable income.
For retirees who don't need the cash, this is often the cleanest move available.
Know your start year, check your account balances each December, and set up automatic withdrawals so you never miss a deadline.
A 25% penalty on money you were going to be taxed on anyway is a lousy way to fund the government.
The rules aren't complicated once you map out your own dates, but they punish anyone who assumes the IRS will remind them.
Final Thoughts
Set a calendar alert, call your custodian, and treat your first RMD year like a tax deadline you can't move.