If you turned 73 this year and have a traditional IRA or 401(k), the IRS expects a slice of that money whether you need it or not.
Required minimum distributions, or RMDs, are the government's way of finally collecting taxes on decades of tax-deferred savings.
Miss the deadline and the penalty is brutal: 25% of the amount you should have withdrawn, though it drops to 10% if you fix it fast.
The SECURE 2.0 Act pushed the starting age to 73 for people who reached 72 after 2022, and it climbs to 75 in 2033.
That means plenty of retirees who spent years planning around age 70½ or 72 now have a different calendar.
If you're unsure which age applies to you, check your birth year before doing anything else.
The math itself is simpler than it sounds.
You divide your account balance from December 31 of the prior year by a life expectancy factor the IRS publishes in its Uniform Lifetime Table.
At 73, that factor is 26.5, so a $500,000 balance means an RMD of roughly $18,868.
The percentage creeps up each year, which is why the withdrawal generally grows as you age.
Here's where people get tripped up: a 401(k) still sitting with a former employer usually has its own RMD, separate from your IRA.
You can't always satisfy one account's requirement with a withdrawal from another.
IRAs are more forgiving, since you can total them up and take the distribution from just one, but that flexibility doesn't extend across the 401(k) line.
You generally must take your first RMD by April 1 of the year after you turn 73, but every year after that the deadline is December 31.
Double up in that first year and you could push yourself into a higher tax bracket, trigger higher Medicare premiums two years later, or expose more of your Social Security to taxation.
Original Roth IRAs have no RMDs during the owner's lifetime, so they can keep compounding untouched.
Roth 401(k)s used to force withdrawals, but that requirement disappeared starting in 2024.
If you're weighing a Roth conversion, this gap is one reason it comes up so often in retirement planning.
One more wrinkle worth knowing: if your spouse is more than 10 years younger and is the sole beneficiary, different tables apply and your RMD shrinks.
And if you inherit an IRA, the rules are stricter than they were a few years ago, with most non-spouse beneficiaries now facing a 10-year window rather than stretching payments over their own lifetime.
A qualified tax professional or financial advisor can run your specific numbers, since bracket thresholds, IRMAA surcharges, and state taxes all interact.
Automating the withdrawal with your custodian is one of the easiest ways to avoid a penalty you'd rather not pay.
The bottom line: RMDs aren't a punishment, they're a deadline.
Knowing your start age, your factor, and your account types keeps the IRS out of your business and more of your money working for you.
Final Thoughts
A little planning now beats a 25% haircut later.