If you turned 73 this year, the IRS has a message you probably won't love: it expects a chunk of your retirement account whether you need the cash or not.
That chunk is called a required minimum distribution, or RMD, and skipping it can trigger one of the harshest penalties in the tax code.
Once you hit a certain age, traditional IRAs and most workplace retirement plans force you to start withdrawing money each year.
The government let those dollars grow tax-free for decades.
Your plan administrator or IRA custodian typically calculates the amount, but the responsibility for taking it on time is yours.
The age rule has shifted in recent years.
Anyone who reached 72 after 2022 generally starts at 73.
If you were born in 1960 or later, the starting line moves to 75.
Miss a deadline and the penalty is a 25% excise tax on the amount you should have withdrawn, according to IRS rules.
That drops to 10% if you fix the mistake within a correction window.
You generally must take your first withdrawal by April 1 of the year after you turn 73.
Every year after that, the money has to come out by December 31.
Miss that second deadline and you can't blame the calendar.
One trap trips up plenty of retirees: taking two distributions in the same year.
If you delay your first RMD to April 1, you still owe a second one by that December.
Two taxable withdrawals can push you into a higher bracket and even raise your Medicare premium two years later.
A few practical moves can soften the blow.
If you don't need the cash, ask your custodian about a qualified charitable distribution, which sends money straight to charity and can count toward your RMD while staying out of your taxable income.
You can also request that taxes be withheld from the distribution, similar to a paycheck, so April doesn't bring a nasty surprise.
Watch out for accounts you may have forgotten.
Old 401(k)s from former jobs, multiple IRAs, and inherited accounts each carry their own rules.
Inherited IRAs in particular have tighter timelines for many non-spouse beneficiaries, and the rules there have been shifting.
A quick call to each custodian is worth the hold time.
Also know that Roth IRAs don't require withdrawals during your lifetime, which is one reason they're popular.
But a Roth 401(k) does follow RMD rules while it sits in the workplace plan.
Rolling it into a Roth IRA can change that picture.
This is the kind of detail worth confirming with a tax professional before you act.
Scammers know RMD season brings confusion.
The IRS does not call, text, or email demanding immediate payment, and it never asks for gift cards.
If someone claims your distribution is overdue and threatens arrest, hang up.
The bottom line: this isn't free money and it isn't optional.
Set a calendar reminder, confirm the math with your custodian, and decide early whether you want withholding.
Final Thoughts
A little planning now beats writing a check to the IRS later.