Search
Retirement

Required Minimum Distributions: The Rules at 73, the 25% Penalty and How to Avoid It

Two people in silhouette sitting under a tree at sunset, with a sticky note reading “25% if missed”.
Photo by Harli Marten on Unsplash

Born in 1953? Then this is the year you turn 73, and the IRS starts expecting a withdrawal from your traditional IRA every year, whether you need the cash or not. Miss it, or take too little, and the tax is 25% of the shortfall. Say the account held $500,000 at the end of last year. Skip that first withdrawal and you'd owe about $4,717. The first deadline isn't the one most people guess, either.

See the first deadline and the fix

Continues on the next page · opens in a new tab

By Ray Castellano · Updated Sep 29, 2026 · Reviewed against IRS (RMD FAQs, Publication 590-B, Form 5329 instructions, Notice 2025-67)

Also worth reading

Papers and envelopes spread on a wooden table, with a sticky note reading “2024 return?”. Medicare Your 2026 Medicare premium was set by your 2024 tax return A blank sheet of paper and a pen on a kitchen counter, with a sticky note reading “$75?”. Medicare Your 2027 raise is 3.6%. See what Part B leaves

You skipped income tax on this money when you earned it, and the deal was always that you'd pay it later. At 73, later arrives. The yearly math is one division: last year's December 31 balance over a number from an IRS table. In the first year, that number is 26.5.

Most people who end up owing the penalty aren't careless. They're the savers who left an account alone for forty years, the surviving spouse who inherited the paperwork, the retiree with a 401(k) still sitting at a job he left a decade ago. And it used to be steeper. Before 2023, the penalty was 50%.

See ways to shrink future RMDs

Continues on the next page · opens in a new tab

Before you do the math, find every account

The division takes a minute. Getting the list right takes longer, because the accounts that cause trouble are usually the ones nobody's looked at in years.

  1. Old workplace plans. A 401(k), 403(b) or 457(b) at a former employer still counts. These are the accounts people forget, often with a mailing address the plan hasn't had in years.
  2. Year-end statements. Your starting number is each account's December 31 balance. For IRAs, the bank or brokerage that holds the account also reports it to the IRS on Form 5498.
  3. The custodian's notice. IRA custodians have to tell you by January 31 if an RMD is due, and they'll give you the amount or offer to figure it. Check it anyway, since each one only knows about the accounts it holds.
  4. Roth money. Roth IRAs, and the Roth option inside a workplace plan, have no required withdrawals while the owner is alive. Those can come off the list.

A complete list is the start. Which of those accounts can share one withdrawal, and what to do if a year already slipped past, is where careful people still get tripped up.

See which accounts can share a withdrawal

Continues on the next page · opens in a new tab

Also on this topic

A black vintage alarm clock on a white background, with a sticky note reading “10-year clock?”. Retirement Your parent's IRA came with a 10-year clock, and yearly withdrawals A pen and a teal calculator on a white desk, with a sticky note reading “Under $75,000?”. Taxes Your Social Security is still taxable. The new $6,000 deduction explains why A bundle of old papers tied with string, next to old photos, with a sticky note reading “Still yours?”. Retirement Your old 401(k) may be in an IRA you never opened A pink piggy bank on a white background, with a sticky note reading “$625 a month?”. Retirement What $100,000 buys you in monthly income at 65: about $625 An office desk phone, with a sticky note reading “First time?”. Taxes What to say when you call the number on your penalty notice Aerial view of a residential neighborhood, with a sticky note reading “Over-assessed?”. Home & Mortgage Your property tax bill has an exemptions line. Read it tonight

Up next on this topic

Picked to go with this article. Each one opens in a new tab.

An orange rotary phone on a wooden table, with a sticky note reading “Code word?”. Debt & Credit The one question to ask when a grandchild calls needing money A dirt path splitting in two through a green forest, with a sticky note reading “Hard to undo?”. Medicare You can leave Medigap any fall. Coming back is a different story A desk calendar showing December 30 and 31 with an orange highlighter, with a sticky note reading “Ends Dec. 31?”. Medicare If your Medicare Advantage plan ends, you get a 63-day Medigap right A stethoscope, a reflex hammer and a blood pressure cuff on a white surface, with a sticky note reading “$63,840?”. Insurance Your 2027 subsidy stops at $63,840. Here's how the line is drawn A red envelope on a yellow background, with a sticky note reading “Plan G +26%?”. Medicare Your Plan G premium jumped again. Check your state's switching window Letter tiles spelling MORTGAGE on a wooden table, with a sticky note reading “+$325?”. Home & Mortgage Your fixed-rate payment has two parts that are not fixed at all Two steaming mugs on a small wooden table, with a sticky note reading “Covered at 62?”. Insurance Your spouse goes on Medicare. You're 62. Where your coverage comes from A hand signing a paper with a pen, with a sticky note reading “Bills: $6,300”. Insurance The adjuster wants to record your call. What you can say A blank sheet on a black clipboard with a yellow pencil on a wooden desk, with a sticky note reading “7 checks?”. Medicare Your Medicare plan can change January 1. Seven checks, in order A stack of U.S. quarters on a white surface, with a sticky note reading “$202.90 a month?”. Medicare Your state may pay your Part B premium. Check one income line Two hands holding a blank white card over a dark wooden table, with a sticky note reading “65 days”. Medicare Your plan said no. Most appeals filed were at least partly reversed Colorful pills spilling from an orange prescription bottle on a blue background, with a sticky note reading “+$300?”. Medicare Your Part D deductible can reach $700 in January. Check this line