If you're 73 or older with a traditional IRA or 401(k), the IRS expects a slice of that money every year—whether you need it or not.
These are Required Minimum Distributions, or RMDs, and missing one can trigger a penalty that stings more than most people realize.
Here's the part that trips people up: the age changed.
Thanks to the SECURE 2.0 Act, the starting age moved from 72 to 73 in 2023, and it climbs to 75 in 2033.
Anyone born in 1959 or later should double-check their specific start year, because the rules are not one-size-fits-all.
The penalty for skipping an RMD is steep—25% of the amount you should have withdrawn, dropping to 10% if you fix it quickly.
That's real money vanishing for a paperwork mistake, not a market crash.
Roth IRAs have no RMDs during your lifetime, which is one reason they're a favorite for estate planning.
Those now skip RMDs too, following a recent change.
Traditional IRAs, most 401(k)s, and inherited accounts still require them.
If you inherited an IRA from someone who wasn't your spouse, the rules got messier.
Many non-spouse beneficiaries must now empty the account within 10 years, and the IRS has been finalizing exactly when annual withdrawals are required along the way.
Getting this wrong is one of the most common—and costly—mistakes financial planners see.
Most brokerages let you set up automatic RMD withdrawals, so the deadline sneaks up on you less.
The deadline, by the way, is December 31 each year—except your very first one, which you can delay until April 1 of the following year.
Just know that delaying the first one means taking two distributions in the same tax year, which can bump you into a higher bracket.
You can also satisfy an RMD by donating up to $105,000 directly to charity through a Qualified Charitable Distribution, which keeps that money out of your taxable income.
For retirees who don't need the cash, that's a quiet way to trim a tax bill.
The takeaway: RMDs aren't optional, and the rules shifted recently enough that plenty of people are still working off outdated information.
A 15-minute call with your plan administrator or a quick check of your account statements could save you a four-figure penalty.
Our take: retirement rules change quietly, and the IRS won't call to remind you.
Treat your RMD like a recurring bill you can't ignore—calendar it, automate it, and confirm your start age rather than assuming.
Final Thoughts
A little attention here beats a painful letter from the taxman later.