If you turned 73 this year, the IRS expects a withdrawal from your retirement accounts whether you need the cash or not.
It's called a required minimum distribution, or RMD, and skipping it can trigger one of the steepest penalties in the tax code.
The rule applies to traditional IRAs, 401(k)s, and most other workplace plans, but not Roth IRAs.
The IRS divides your account balance by a life expectancy factor from a published table.
At 73, that factor is about 26.5, so a $500,000 balance means roughly $18,900 must come out by December 31.
At 80, the factor drops to about 20.2, pushing the required amount near $24,750 on the same balance.
The older you get, the larger the percentage the government wants.
Miss the deadline and the penalty is 25% of the amount you should have withdrawn, dropping to 10% if you fix it within a correction window.
On a $20,000 missed RMD, that's a $5,000 hit before you even count the income tax you still owe on the withdrawal.
Setting up an automatic distribution with your custodian is the cheapest insurance against that mistake.
The first year is the one that trips people up.
You can delay your very first RMD until April 1 of the following year, but doing that stacks two taxable withdrawals into one calendar year.
That can push you into a higher bracket, increase what you pay for Medicare Part B and Part D, and make more of your Social Security taxable.
For most retirees, taking the first one on schedule is the cleaner move.
Each IRA has its own RMD, but you can total them and withdraw from just one account if you want.
That flexibility does not apply to 401(k)s, which must be calculated and paid separately.
If your spouse is more than 10 years younger, special tables can shrink your required amount.
And a 2023 rule change pushed the starting age to 73, with 75 coming in 2033.
If you don't need the money, you can direct part or all of your RMD to charity through a qualified charitable distribution, up to $105,000 in 2024.
That amount counts toward your RMD but never shows up as taxable income, which can protect your Medicare premiums and deductions.
For retirees who give anyway, it's often the single best tax move available.
One more thing worth knowing: if you're still working past 73 and own less than 5% of the company, a workplace 401(k) can sometimes be skipped until you actually retire.
That distinction has burned plenty of people who assumed all their accounts worked the same way.
The takeaway is that an RMD isn't a suggestion, it's a scheduled tax event, and the accounts most people ignore for decades suddenly demand attention at the worst possible time.
Automating the withdrawal and reviewing the tax hit every January takes an hour and can save thousands.
Final Thoughts
Treat the deadline like a bill, because that's exactly what it is.