You saved it. You invested it. You left it alone for decades while compound growth did what it does. Then the IRS showed up. At age 73, the federal government requires you to start withdrawing money from your traditional IRA, your 401(k), and most other tax-deferred retirement accounts — whether you need the money or not. These mandatory withdrawals are called Required Minimum Distributions, or RMDs. The amount you're required to take is calculated by the IRS, increases every year as you age, and is taxed as ordinary income the moment it hits your account.
Most people think about RMDs as a single annual obligation — take out a number, pay the tax, move on. The more accurate way to think about it: RMDs are the IRS collecting on a decades-long tax deferral, and the bill gets larger every year. Here's why. The IRS calculates your RMD by dividing your prior year-end account balance by a number from their Uniform Lifetime Table. That number — called the distribution period factor — shrinks by roughly one point each year as you age. At 73, the factor is 26.5. At 80, it drops to 20.2. At 85, it reaches 16.0. So not only does your required withdrawal percentage increase each year, but if your account keeps growing, the actual dollar amount can rise steeply. The IRS isn't slowing down — it's accelerating. Your Age IRS Factor Withdrawal RMD on **RMD on Rate $500K $1M** 73 26.5 3.77% $18,868 $37,736 76 23.7 4.22% $21,097 $42,194 80 20.2 4.95% $24,752 $49,505 85 16.0 6.25% $31,250 $62,500 Source: IRS Uniform Lifetime Table (Publication 590-B, 2025 edition). RMD amounts are illustrative based on a static account balance — actual amounts will vary based on your year-end balance.
Congress passed the SECURE 2.0 Act in 2022, and it changed three things that matter directly to your RMD picture. First, the starting age moved. If you were born between 1951 and 1959, your RMDs begin at 73 — not 70½, and not 72. If you were born in 1960 or later, the starting age moves to 75, effective in 2033. The IRS confirmed that those born in 1959 use age 73 (not 75), closing a gap in the original legislation. Second, the penalty for missing an RMD dropped — significantly. The old penalty was 50% of the amount you failed to withdraw. Under SECURE 2.0, that dropped to 25%. And if you catch the error and fix it within a specific correction window — generally by the end of the second taxable year after the missed RMD — the penalty drops further to 10%. You'll still owe the tax on the distribution, but the penalty itself is now more survivable. Third, if you have a Roth 401(k) or Roth 403(b) through an employer, RMDs are eliminated for those accounts starting January 1, 2024. Previously, workplace Roth accounts had the same RMD requirements as traditional 401(k)s — a rule that made little sense since distributions are tax-free. That inconsistency is now fixed. Birth Year RMD Start Age Notes Before July 1, 1949 70½ Pre-2019 rules July 1, 1949 Dec 31, 72 SECURE Act 1.0 1950 1951 1959 73 SECURE 2.0 Act 1960 or later 75 Effective 2033
The delay to age 73 (or 75) is not just a compliance change. It creates a planning window — the years between when you retire and when RMDs begin — where your taxable income is often at its lowest point in decades. During those years, many retirees are drawing from savings, waiting on Social Security, and sitting in a lower tax bracket than they'll be in once RMDs kick in. That's the window where a Roth conversion strategy can dramatically reduce the size of your future RMDs. A Roth conversion works by moving money from a traditional IRA — where it will eventually face mandatory distributions — into a Roth IRA, where it grows tax-free and faces no RMDs at all. You pay ordinary income tax on the converted amount in the year you convert. But by reducing the balance in your traditional accounts now, you reduce how much the IRS will eventually force you to withdraw and pay taxes on later. The math is straightforward. If you convert $100,000 from your traditional IRA before RMDs begin, that $100,000 — plus whatever it earns — is no longer in the RMD calculation. Depending on your balance, converting even a portion in the years before 73 can lower your future required withdrawals by thousands of dollars annually.
One of the most common — and expensive — RMD mistakes involves accounts that many retirees forget to include. The IRS allows you to aggregate some accounts and not others. Traditional IRAs, SEP IRAs, and SIMPLE IRAs can be aggregated. That means you calculate the RMD for each account, add them together, and then withdraw the total from any combination of those accounts. You could pull the entire combined RMD from just one IRA if you wanted. 401(k) accounts do not work this way. Every 401(k) — including ones from former employers — must satisfy its own RMD independently. If you have $500,000 in a traditional IRA and $200,000 in an old 401(k) from a previous job, you cannot satisfy both RMDs with a single withdrawal from the IRA. The 401(k) must distribute its own requirement separately. Failing to do this triggers the penalty on that 401(k) RMD even though your total withdrawals may have been sufficient. This is one reason financial professionals often recommend rolling old 401(k) accounts into an IRA before RMD age — it simplifies the compliance obligation and eliminates the risk of an orphaned account generating a penalty. **Want to know what your RMD picture looks like based on your accounts? Our Tax Gap Report shows you what's coming — and what you can still do about it.**
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IRS Uniform Lifetime Table (Publication 590-B, 2025 edition).