The deal you made with your traditional IRA or 401(k) decades ago had two halves. The first half was pleasant: contribute pre-tax money and let it grow untaxed. The second half arrives in your 70s: the government wants its tax revenue, so it requires you to start withdrawing, and taxes each withdrawal as ordinary income. These required minimum distributions, RMDs, come with real deadlines and one of the tax code’s nastier penalties, and every year a fresh class of 73-year-olds learns the rules the hard way.
The current age is 73 for people born from 1951 through 1959, set by the SECURE 2.0 law, which also scheduled the age to rise to 75 for those born in 1960 or later. The IRS lays out the full framework on its RMD topic page; here is what actually matters at the kitchen table.
Which accounts are on the hook
RMDs apply to traditional IRAs, SEP and SIMPLE IRAs, and workplace plans like 401(k)s, 403(b)s, and 457(b)s. Two important exceptions. Roth IRAs have no lifetime RMDs for the original owner, and since a 2024 change, designated Roth accounts inside workplace plans no longer require lifetime distributions either. And if you are still working at 73, your current employer’s plan may let you delay RMDs from that plan until you retire, provided you do not own more than 5 percent of the company; that “still working” exception never applies to IRAs.
Inherited accounts run under their own, stricter rulebook, including a 10-year emptying requirement for most non-spouse heirs; if you have inherited an IRA, treat that as a separate homework assignment.
The deadlines, and the first-year trap
Your first RMD is due by April 1 of the year after the year you turn 73. Every later RMD is due by December 31 of its year. See the trap? If you delay that first withdrawal into the new year, you owe two RMDs in the same calendar year, the delayed first one by April 1 and the regular one by December 31, and both land on the same tax return. Stacking two taxable withdrawals can push you into a higher bracket, raise taxes on your Social Security, and trigger higher Medicare premiums two years later. For many people, taking the first RMD in the year they turn 73, rather than using the April grace period, is the cleaner move. It is worth an hour with a calculator or a preparer before you decide.
How the amount is figured
The formula is simple division: your account balance on December 31 of the prior year, divided by a life-expectancy factor from the IRS’s Uniform Lifetime Table, published in Publication 590-B. The factor shrinks as you age, so the required percentage grows over time, starting at roughly 4 percent in the early years. A different table with a larger factor, meaning smaller RMDs, applies if your sole beneficiary is a spouse more than ten years younger.
Mechanics worth knowing: if you own several IRAs, you calculate each RMD separately but may take the total from any one or combination of the IRAs. Workplace plans do not pool that way; each 401(k) generally must pay its own RMD. Your custodians will usually calculate the number for you and will report to the IRS that a distribution was required, so this is not an obligation you can quietly skip. And an RMD cannot be satisfied by rolling money to another retirement account; it has to actually come out and be taxed.
The penalty, now smaller but still painful
Miss some or all of an RMD and the IRS charges an excise tax of 25 percent of the amount you failed to withdraw, reduced to 10 percent if you correct the shortfall within the law’s correction window, generally two years. That is down from the old 50 percent, but it is still a brutal price for a missed calendar entry. If you do miss one, act fast: withdraw the shortfall immediately, file Form 5329, and ask for a waiver; the IRS can excuse the penalty for reasonable cause when the error is fixed promptly, and it regularly does.
The charity move that erases the tax
If you give to charity anyway, qualified charitable distributions deserve your attention. From age 70½, you can direct money straight from an IRA to qualified charities, up to an annual limit that is over $100,000 and indexed each year, and the transfer counts toward your RMD while never touching your taxable income. For retirees who take the standard deduction, and most do, a QCD beats writing a check and hoping to itemize, because it removes the income entirely, which can also help keep Medicare premium surcharges at bay. The money must go directly from custodian to charity, so set it up through your IRA provider, not by withdrawing first.
The whole RMD system rewards one habit: deciding early each year how you will take the money, monthly, quarterly, or as a December lump sum, and automating it. The tax bill was always part of the deal; the penalty never has to be.
This article was produced with AI assistance and reviewed by a human editor. Figures are linked to their primary sources; where a claim could not be verified from the public record, we say so.
