Required Minimum Distributions: The Age-73 Rule and the 25% Penalty for Missing One

Required Minimum Distributions force money out of tax-deferred retirement accounts once you reach a certain age, ensuring the IRS eventually collects tax on decades of deferred growth — and missing one carries one of the steeper percentage-based penalties in the entire tax code.

When RMDs Start: Age 73 (Rising to 75)

Under SECURE 2.0, the age at which you must begin taking RMDs from most tax-deferred retirement accounts is 73. This age is scheduled to rise further to 75 for individuals turning 73 after 2032. Your first RMD must generally be taken by April 1 of the year after you reach your required beginning age — though taking it that late means you'll also need to take your second year's RMD by that same December 31, potentially bunching two distributions' worth of taxable income into one year, so many people choose to take their first RMD in the actual year they turn the required age instead of waiting for the following April.

How the Amount Is Calculated

Your RMD for the year is calculated by dividing your account balance as of December 31 of the prior year by a life-expectancy factor from IRS tables (generally the Uniform Lifetime Table for most account owners). The factor decreases each year as you age, meaning the required percentage of your balance you must withdraw increases over time — at age 90, for example, the divisor is small enough that you're required to withdraw roughly 8% of your balance that year, up from around 4% at the initial required age.

The Penalty: 25%, Reduced From 50%

Missing an RMD (or taking less than the full required amount) triggers an excise tax of 25% of the shortfall — a significant reduction from the 50% penalty that applied before SECURE 2.0. The penalty drops further to 10% if you correct the missed distribution within a two-year correction window. This is still a steep penalty relative to most tax code provisions, making RMD compliance worth tracking carefully as the required age approaches.

The Still-Working Exception

If you're still employed at the company sponsoring your 401(k) (and own less than 5% of the company), you can generally delay RMDs from that specific employer's plan until you actually retire, even past your required beginning age — this exception applies to employer plans, not to traditional IRAs, which require RMDs starting at the required age regardless of employment status.

Qualified Charitable Distributions: An RMD-Satisfying Strategy

If you're charitably inclined, a Qualified Charitable Distribution lets you transfer up to $111,000 (for 2026) directly from your IRA to a qualifying charity, counting toward your RMD requirement without the distributed amount being included in your taxable income at all — a meaningfully better outcome than taking the RMD as taxable income and then separately claiming a charitable deduction, especially if you take the standard deduction and wouldn't otherwise get any tax benefit from the donation.

Roth Accounts: Different Treatment

Since 2024, Roth 401(k) and Roth 403(b) accounts no longer require RMDs during the original owner's lifetime, matching the treatment Roth IRAs have always had. Traditional 401(k)s, traditional IRAs, SEP-IRAs, and SIMPLE IRAs all still require RMDs starting at the applicable age.

A Worked Example

A 73-year-old with $500,000 in a traditional IRA as of the prior December 31 has an RMD based on the applicable life-expectancy factor for that age (roughly 27.4 under current tables), producing an RMD of approximately $18,250 for the year (roughly $500,000 ÷ 27.4). If they fail to withdraw this amount by the December 31 deadline, they'd face a 25% excise tax on the shortfall — reducible to 10% if corrected within the two-year window.

Common Questions

Do Roth IRAs ever require RMDs for the original owner? No — Roth IRAs have never required RMDs during the original owner's lifetime, regardless of age; this has been true for decades and wasn't changed by SECURE 2.0.

What happens to RMDs if I inherit a retirement account? Different, generally more restrictive rules apply — see our inherited IRA rules guide for the 10-year distribution requirement that applies to most non-spouse beneficiaries.

Can I take my RMD from just one account if I have several? For multiple traditional IRAs, yes — you can calculate each account's RMD separately then withdraw the total from any combination of those IRA accounts. For 401(k)s, RMDs generally must be taken separately from each individual plan.