If you turned 73 last year, the IRS expects a slice of your retirement account whether you need the money or not.
Required minimum distributions, or RMDs, force savers to pull a minimum amount from traditional IRAs and most workplace plans each year once they hit a set age.
Miss the deadline and the penalty is steep: 25% of the amount you should have withdrawn, dropping to 10% if you fix it quickly.
The rule exists because these accounts grew tax-free for decades.
That is why the age has crept up over time, from 70½ to 72, and now 73 for most people, with 75 arriving in 2033 for anyone born in 1960 or later.
The math sounds simple, but the execution trips up plenty of retirees.
Your first withdrawal comes with a grace period.
If you reach your RMD age in 2025, you can delay that first payment until April 1, 2026.
Take it, and you still owe a second distribution by Dec. 31, 2026.
Stacking two taxable withdrawals into one year can shove you into a higher bracket, bump up Medicare premiums, or trigger taxes on Social Security benefits.
The IRS divides your account balance from the prior Dec. 31 by a life expectancy factor from a uniform table.
A 73-year-old uses roughly 26.5, meaning about 3.8% of the balance comes out.
At 80, the divisor falls near 20.2, pushing the percentage above 4.9%.
The older you get, the larger the required bite.
Here is where it gets thorny: not all accounts follow the same clock.
If you are still working and own less than 5% of your employer, an RMD may not apply to that specific 401(k) until you retire.
Roth IRAs skip RMDs entirely during the owner's lifetime, and starting in 2024, Roth 401(k)s no longer force withdrawals either.
A common mistake is holding multiple IRAs and calculating each one separately.
You actually total the balances and take the combined RMD from any one or several of them.
Workplace plans play by different rules and generally must be calculated and paid account by account.
A financial advisor or a decent calculator can keep you out of trouble.
For households already squeezed by grocery bills and rent, RMDs can feel like one more squeeze.
The money is taxed as ordinary income, and if you do not need it, reinvesting in a taxable brokerage account is one route.
Qualified charitable distributions let you send up to $108,000 in 2025 straight from an IRA to charity, satisfying the RMD without adding to your taxable income.
Our take: RMDs are not a punishment, just a bill arriving later than most people plan for.
Automate the withdrawal, check the age rules for every account, and revisit the math each January.
Final Thoughts
A few minutes of planning beats writing a check to the IRS for a quarter of what you forgot to take.