If you turned 73 this year and have a traditional IRA or 401(k), the IRS expects a slice of it in 2025.
It's called a required minimum distribution, or RMD, and skipping it can trigger one of the harshest penalties in the tax code.
Here's the short version: once you hit your required beginning date, you must pull a minimum amount out of most tax-deferred retirement accounts every year and pay income tax on it.
Roth IRAs are the big exception, since original owners never face RMDs on them.
Roth 401(k)s used to be included, but that changed starting in 2024.
The age moved recently, which is where a lot of people get tripped up.
The SECURE 2.0 Act pushed the starting age from 72 to 73 for anyone who turned 72 after the end of 2022, and it climbs to 75 in 2033.
If you already started taking distributions, you keep going.
How much you owe depends on your account balance and a life expectancy factor from IRS tables.
A rough shortcut: divide your December 31 balance by the factor for your age.
At 73, that divisor is about 26.5, so a $500,000 balance means roughly $18,900 must come out.
Skip it, and the penalty is 25% of the amount you should have withdrawn, dropping to 10% if you fix it quickly.
The biggest mistake people make is missing their first deadline.
You actually get two distributions in year one if you delay the first until April 1 of the following year, which can shove you into a higher bracket.
Many financial planners suggest just taking that first one on time.
If you're still working and own a 401(k) at that job, you may qualify for a delay, but IRAs don't offer that break.
And if you hold multiple IRAs, you can total the RMDs and pull the money from whichever account is easiest, as long as the full amount comes out.
Inherited accounts follow separate rules that differ based on your relationship to the original owner.
One upside: qualified charitable distributions.
If you're 70½ or older, you can send up to $108,000 per year from an IRA directly to charity, and it counts toward your RMD while staying out of your taxable income.
That move has gotten more popular as standard deductions have grown and fewer retirees itemize.
Set a calendar reminder, check your balance each January, and confirm the withdrawal actually left the account.
Custodians process transfers on their own timelines, and a request submitted in December can post in January, which the IRS treats as late.
The bottom line: RMDs aren't optional, and the penalty is steep enough to wreck a year of careful budgeting.
Final Thoughts
Spending twenty minutes with your account statements now beats writing a check to the IRS later.