If you turned 73 this year, the IRS has a birthday present waiting for you: your first required minimum distribution.
It's the moment your tax-deferred retirement account stops being a quiet pile of money and starts sending you mandatory checks.
Once you hit RMD age, you must pull a minimum amount out of traditional IRAs and most 401(k) plans every year.
Skip it and the penalty is 25% of what you should have withdrawn — dropping to 10% if you fix it fast.
Roth IRAs are exempt, which is why they've become the favorite tool of people who plan ahead.
The IRS divides your account balance by a life expectancy factor from a table.
So a $500,000 balance means roughly $18,900 must come out this year.
That withdrawal lands on your return as ordinary income.
For a retiree who's also collecting Social Security, a bigger RMD can push more of those benefits into the taxable column — a double hit that surprises a lot of households in their first year.
You can delay your very first RMD until April 1 of the following year, which sounds generous until you realize you'll then take two distributions in the same tax year.
That can shove you into a higher bracket.
Most advisers say just take the first one on time.
If you're still working and own a 401(k) at that job, you may be able to skip RMDs on that specific plan until you actually retire.
That exception doesn't apply to IRAs or to old 401(k)s from former employers.
Read the fine print on each account, not the whole portfolio.
There are legitimate ways to shrink the tax bill.
Moving money into a Roth account during low-income years reduces future RMDs.
Qualified charitable distributions let you send up to $105,000 per year straight from an IRA to charity — it counts toward your RMD and never shows up as income.
And if you have a large gap before RMDs begin, that's the window to convert.
The most common mistake isn't a tax strategy failure.
Old 401(k)s from jobs you left a decade ago still require withdrawals, and the custodian will not chase you down.
Make a list of every retirement account with your name on it, then check that each one has a withdrawal scheduled.
Set a calendar reminder for early December.
That gives you time to calculate the right amount, sell assets in an orderly way, and confirm the distribution actually left the account before the year closes.
A transfer initiated December 31 but processed January 2 counts for the wrong year.
If the numbers feel overwhelming, a one-time session with a fee-only fiduciary planner often costs a few hundred dollars and can save multiples of that.
Ask specifically about RMD sequencing and Roth conversion timing, not just investment picks.
The rules aren't designed to punish you — they're designed to collect taxes that were deferred for decades.
Treat the first RMD year as a planning checkpoint rather than an annoyance, and you'll keep more of what you saved.
Our take: the smartest move is to look at your RMD projection at least five years before it starts, while you still have room to maneuver.
Final Thoughts
Waiting until the IRS sends a reminder means your options have already narrowed.