Retirement Planning Series
Retirement · RMDs
Required Minimum Distributions
— What You Owe at 73
The IRS lets your retirement money grow tax-deferred — but they want their cut eventually. Starting at age 73, you're required to withdraw a minimum amount each year from traditional accounts (401k, IRA, 403b). Miss it and the penalty is brutal.
The numbers that matter
Current RMD Age
73
Increased from 72 by SECURE Act 2.0. Goes to 75 in 2033 for those born 1960 or later.
First-Year Deferral
April 1
Of the year AFTER you turn 73. But taking the first one in the next year means TWO RMDs that year — usually worse for taxes.
Penalty for Missed RMD
25%
Of the amount you should have taken. Reduced to 10% if corrected within 2 years. The harshest penalty in the tax code.
Roth IRA RMDs
None
Roth IRAs have no RMDs during the owner's lifetime. Roth 401(k)s DID require them, but SECURE 2.0 eliminated that starting 2024.
How RMDs are calculated
RMD = Prior-year-end balance ÷ Life-expectancy factor from the IRS Uniform Lifetime Table.
Example: Age 73, $1M balance. Factor is 26.5. RMD = $1,000,000 ÷ 26.5 = $37,736. You must withdraw at least that much by Dec 31 — and pay ordinary income tax on it.
The factor decreases each year, so the percentage you have to withdraw goes up — slowly at first, then faster in your 80s and 90s.
Strategies to manage RMDs
- Roth conversions BEFORE 73: Convert traditional to Roth between retirement and RMD age. Pay tax in lower-income years. Roth has no RMDs.
- Qualified Charitable Distribution (QCD): Direct up to $105K/year from your IRA to charity. Counts toward RMD but skips your taxable income entirely.
- Spread the first year: Don't defer the first RMD to April. Two RMDs in one year usually pushes you into a higher bracket.
- Use RMDs for Medicare premiums + taxes: Many retirees fund their tax bill from the RMD itself, simplifying cash flow.
Plan your RMD strategy before 73
The years between retirement and RMD age are the highest-leverage tax planning window of your life. We'll show you what to do with them.
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