RMDs are not optional once they begin. At age 73, the IRS requires annual withdrawals from traditional IRAs, 401(k)s, and other tax-deferred retirement accounts, whether you need the money or not. Each distribution is taxed as ordinary income, and missing part of the required amount can trigger a 25% excise tax on the shortfall.

RMDs Turn Tax Deferral Into Forced Taxable Income

RMD rules exist because tax deferral was always temporary. Traditional IRAs and 401(k)s let you postpone tax while accumulating assets, but the IRS eventually forces distributions so those dollars become taxable income.

The annual amount is formula-driven: prior December 31 account balance divided by an IRS life-expectancy factor. At age 73, the divisor is about 26.5, which is roughly a 3.8% withdrawal requirement. By age 80, the divisor is around 20.2, or about 5%, so required distributions rise over time even if spending does not.

That progression gets expensive quickly on large balances. A retiree with a $2 million traditional IRA at 73 is looking at an initial RMD of about $75,000 to $80,000. That income stacks on top of Social Security, pension income, capital gains, and other cash flow, which is why many retirees discover their tax picture is much heavier than expected once RMDs arrive.

Recent law changed timing but not the underlying pressure. SECURE 2.0 moved the RMD start age from 72 to 73 for people born 1951 through 1959, and to 75 for those born in 1960 or later (effective 2033). SECURE 2.0 also eliminated pre-death RMDs from Roth assets in employer plans, improving Roth 401(k) planning flexibility.

You cannot eliminate RMDs once they start, but you can reduce their long-term impact. Roth conversions before age 73 shrink the balance subject to future RMDs. QCDs allow IRA owners age 70 1/2 and older to give up to $105,000 directly to qualified charities each year, satisfying part or all of an RMD without adding that amount to taxable income or MAGI. Deliberate pre-RMD withdrawals can also lower future forced distributions by reducing the account base early.

Your Best Chance to Control RMDs Is Before Age 73

If you are 60 to 70 with most of your savings in pre-tax accounts, running a future RMD projection is not optional. A $1.5 million IRA at age 60 growing at 6% with no distributions becomes about $3.4 million by age 73, and the first RMD on that balance is over $125,000 before counting Social Security or other income.

The planning window closes the day your first RMD is due. Every year of intentional Roth conversions, pre-RMD withdrawals, and QCD use starting at 70 1/2 can materially change your long-term tax outcome. The question is not whether RMDs will happen. The question is whether you shaped them before they shaped you.

The RMD Errors That Trigger Unnecessary Taxes and Penalties

• Delaying the first RMD to April 1 of the following year without modeling consequences. That election often creates two RMDs in one calendar year and can spike both tax brackets and IRMAA surcharges.
• Calculating or aggregating RMDs incorrectly across multiple IRAs. Even when the final distribution can come from fewer accounts, the required amount still has to be calculated correctly at the account level first.
• Missing the deadline. Except for the first-year delay option, RMDs are due by December 31 each year, and shortfalls can trigger the 25% excise tax.