If you were born in 1951, Uncle Sam has his eye on you right now.
That’s because April 1, 2025, is the deadline to take your first required minimum distribution (RMD), which is essentially a mandatory withdrawal from retirement accounts — and a form of taxable income, unfortunately.
This initial deadline applies to people who turned age 73 in 2024, with some exceptions. Here is a detailed look at who is affected and how.
RMD ages affected by the Secure 2.0 Act
The Securing a Strong Retirement Act of 2022, a federal law also known as the Secure 2.0 Act, raised the starting age for RMDs from 72 to either 73 or 75 for certain people.
Specifically, the law (admittedly ineloquently) states:
- Age 73 is when you must take your first RMD if you reached or will reach age 72 after Dec. 31, 2022, and reached or will reach age 73 before Jan. 1, 2033 (unless you qualify for an exception — more on that next).
- Age 75 is when you must take your first RMD if you will reach age 74 after Dec. 31, 2032 (unless you qualify for an exception).
An exception for older workers
Some older workers with workplace retirement plans may be able to postpone their initial RMD, regardless of whether they would otherwise have to start withdrawing RMDs at age 73 or 75. As the IRS recently reiterated:
“Most [401(k) plan] participants can wait until April 1 after retiring to receive distributions if their workplace plan allows it.”
Brace for two withdrawals in one year
For those whose first RMD is due April 1, 2025, the 2025 tax year — meaning the one for which returns are due by April 2026 — might be rougher than usual. That’s because the IRS gives you an extra three months to withdraw your very first RMD, but for all your subsequent RMDs, the deadline will always be Dec. 31 of each tax year.
As a result, those who turned 73 in 2024 are required to take their RMD for the 2024 tax year by April 1, 2025, and take their RMD for the 2025 tax year by Dec. 31, 2025. Having to withdraw two RMDs in one tax year could significantly increase your taxable income for 2025 and, in turn, significantly increase your tax bill that is due by April 2026.
The penalty for missed RMDs
Failure to take a required minimum distribution could result in hefty penalties. The penalty amount is equivalent to 25% of the RMD amount you fail to take on time.
Say April 1, 2025, is the deadline for your first RMD and the amount of the RMD is $5,000. If you miss the deadline, you’d be facing a penalty of $1,250.
Types of accounts subject to RMDs
RMDs apply to most types of retirement plans. They are:
- Traditional individual retirement accounts
- Simplified employee pension (SEP) IRAs
- Savings incentive match plan for employees (SIMPLE) IRAs
- Traditional 401(k) plans
- Traditional 403(b) plans
- 457(b) plans
- Profit sharing plans
- Other defined contribution plans
Roth IRAs and Roth 401(k) and 403(b) plans are exceptions, but only for their original owners.
So, if you have a Roth IRA that you opened for yourself, for example, you will not be required to withdraw RMDs from it during your lifetime. But if you later leave it to someone else as an inheritance, that beneficiary generally will have to withdraw RMDs from it.
How RMD amounts are determined
The amount of a required minimum distribution depends on what the account balance was on Dec. 31 of the applicable tax year and your life expectancy.
A free online RMD calculator available from the U.S. Securities and Exchange Commission can give you an idea, and worksheets and detailed instructions to calculate the figure yourself are available from the IRS.
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