If you turned 73 this year, the IRS is watching one specific number on your calendar.
It's the deadline to pull money out of your retirement accounts, and missing it can cost you real cash.
The rule is called a required minimum distribution, or RMD.
Once you hit 73, the government stops letting your traditional IRA and 401(k) sit untouched forever.
You have to withdraw a minimum amount every year so Uncle Sam can finally collect the taxes you deferred for decades.
Here's the part that catches people off guard: the penalty for skipping an RMD is 25% of the amount you should have taken.
If you were supposed to pull $20,000 and didn't, you could owe $5,000 in penalties alone, on top of the income tax you still owe on the withdrawal.
If you catch the mistake and fix it within a specific correction window, the penalty can drop to 10%.
But you have to file the right paperwork, and the clock starts ticking the moment you miss it.
Your first RMD comes with a grace period.
For the year you turn 73, you can delay that first withdrawal until April 1 of the following year.
Sounds generous, but it's a trap for the unprepared.
If you push your first one into April, you'll have to take a second RMD by December 31 of that same year — two taxable withdrawals stacked into one tax year.
That can shove you into a higher bracket and even bump up your Medicare premiums.
Your RMD is generally your account balance at the end of the prior year, divided by a life expectancy factor the IRS publishes.
At 73, that factor is about 26.5, so a $500,000 balance means roughly $18,900 you must withdraw.
Your brokerage or fund company usually calculates this for you and can set up automatic payments so you never miss it.
Roth IRAs have no RMDs during the owner's lifetime, so don't touch those.
But Roth 401(k)s do require withdrawals, which surprises a lot of savers.
If you own multiple IRAs, you can total them up and take the RMD from just one, but each 401(k) has to be handled separately.
And if you're still working past 73 and don't own more than 5% of the company, your current employer's 401(k) may be exempt until you actually retire.
The easiest fix is a calendar reminder set for early December, not late April.
That gives you time to check the number, move the money, and confirm it cleared before the year closes.
Automating it through your custodian removes the guesswork entirely.
If you're already past 73 and haven't taken anything this year, don't wait for a letter from the IRS.
Call your plan administrator or financial institution this week and ask two questions: what's my RMD for this year, and can we schedule it automatically?
The deadline is boring, but the penalty is not.
For most retirees, this is a five-minute phone call that prevents a five-figure headache.
The takeaway here is simple: RMDs aren't a wealth grab, they're a scheduling problem.
Final Thoughts
Treat the deadline like a bill you can't ignore, automate it once, and you'll never have to think about that 25% penalty again.