Money in a traditional retirement account cannot stay there untouched forever. Once an account owner reaches 73, the government requires withdrawals to begin, and the penalty for ignoring the rule is one of the harshest in the tax code. These mandatory withdrawals, known as required minimum distributions, catch retirees off guard every year, both those who forget to take one and those who take theirs at the worst possible moment for their tax bill.
Why age 73 is the trigger
Traditional IRAs and most workplace plans, including 401(k)s and 403(b)s, are funded with pre-tax dollars, which means the money grows without being taxed until it comes out. The government eventually wants its share, so it sets a deadline for withdrawals to start. Under the SECURE 2.0 law, the required beginning age is 73 for anyone who reached 72 after December 31, 2022. The IRS confirms this schedule in its required minimum distribution FAQs, and the age is set to climb again, to 75, starting in 2033. A retiree turning 73 this year is squarely in the group that must begin.
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The penalty that used to be 50 percent
The reason this rule demands attention is the size of the penalty for missing it. If a retiree fails to take the full required amount, the IRS imposes an excise tax of 25 percent of whatever was not withdrawn. That is a steep charge, but it is actually an improvement: SECURE 2.0 cut the penalty from the old 50 percent. Better still, the penalty drops to 10 percent if the shortfall is corrected promptly within a set window and the proper form is filed. The IRS lays out the reduced penalty details for those who catch a missed distribution and fix it quickly. Still, even a corrected miss costs money, which is why marking the deadline matters.
The first-year timing trap
There is a special rule for the very first required distribution that quietly creates problems. The first RMD can be delayed until April 1 of the year after the account owner turns 73, a small grace period that sounds helpful. The catch is that delaying does not skip a distribution; it stacks two of them into the same calendar year. A retiree who pushes the first withdrawal into the following spring must still take that year’s regular distribution by December 31, meaning two taxable RMDs land in one year. That can inflate taxable income enough to bump a retiree into a higher tax bracket or raise Medicare premiums. For many people, taking the first RMD in the year they turn 73 rather than delaying it avoids that pileup entirely.
How the required amount is figured
The size of each year’s distribution is not arbitrary. It is calculated by dividing the account’s balance as of December 31 of the previous year by a life-expectancy factor from an IRS table, most commonly the Uniform Lifetime Table. As a retiree ages, the factor shrinks and the required percentage of the account rises. The IRS publishes the full method and worksheets on its required minimum distributions page. A person with several traditional IRAs can total the required amount across them and pull it from one account, but workplace plans generally each require their own separate distribution, a distinction that trips up retirees juggling multiple accounts.
Roth accounts sit outside the rule
One category of retirement money escapes the requirement during the owner’s lifetime. Roth IRAs, which are funded with after-tax dollars, carry no required minimum distributions for the original owner, so that money can keep growing untouched for as long as the owner lives. That difference makes Roth accounts a useful place to leave savings that are not needed for living expenses, and it is one reason some retirees consider converting traditional balances to Roth in lower-income years before RMDs begin.
A way to satisfy the RMD and cut the tax
For retirees who give to charity, there is a strategy that turns the obligation into an advantage. A qualified charitable distribution, or QCD, lets an account owner age 70 and a half or older send money directly from an IRA to a qualified charity, and that transfer can count toward the year’s required distribution while keeping the amount out of taxable income. That is a meaningful edge, because a normal RMD adds to income whether or not the retiree needs the cash, while a QCD satisfies the rule without raising the tax bill. The practical takeaway is straightforward. A retiree turning 73 should confirm the deadline, calculate the required amount from last year’s balance, decide whether to take the first distribution now rather than stacking two next year, and consider a charitable transfer if giving is already part of the plan. The one thing not to do is let the December 31 deadline slip, because the penalty for silence is expensive.
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.
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