For most of your working life, retirement accounts are a one-way street — money goes in, and what you do with it is up to you. That changes at a certain age. Once you hit it, the IRS requires you to start taking money out of most tax-deferred accounts every year, whether you need the cash or not.
What actually changes at 73
Once you reach the age the IRS has set as your RMD start age — 73 under current law for most people, though your exact start age depends on your birth year — traditional IRAs, 401(k)s, and similar tax-deferred accounts each require a minimum withdrawal every year. The amount isn’t a flat percentage; it’s based on your account balance and a life expectancy factor from an IRS table, which is why the number is a little different for everyone. Our RMD calculator walks through that math with your own numbers.
The penalty that trips up careful savers
Missing an RMD, or taking less than required, carries a real excise tax penalty on the shortfall — and it applies even if the mistake was an honest one. The IRS does allow the penalty to be reduced or waived if you correct the shortfall promptly and can show reasonable cause, but that’s a process worth avoiding rather than relying on. The exact percentage and correction window can change, so we’d rather confirm the current rule with you directly than print a number here that’s gone stale by the time you read it.
Where this trips people up in practice
- Multiple accounts, one deadline. Several IRAs can share a single combined RMD taken from any one of them — but each 401(k) generally needs its own withdrawal, separately.
- The first year has a grace period, and it’s a trap. Your very first RMD can be delayed into the following spring — but doing that means taking two RMDs in one calendar year, which can push you into a higher tax bracket than expected.
- Inherited accounts play by different rules. A beneficiary’s RMD schedule usually looks nothing like the original owner’s, and getting it wrong is one of the more common costly mistakes we see.
- Roth IRAs are the exception. The original owner never has to take an RMD from a Roth IRA during their lifetime.
None of this is a reason to worry — it’s just a once-a-year task that’s easy to get right with a little planning, and expensive to get wrong by accident. If you’re approaching this age, or already there, talk with our team before your next distribution is due.