As the tax calendar moves forward, a crucial financial deadline looms for many retirees in the United States: April 1, 2025. For individuals who turned 73 in 2024, this marks the deadline for taking their first Required Minimum Distribution (RMD) from tax-deferred retirement accounts such as Traditional IRAs, 401(k)s, and 403(b)s. Failing to meet this requirement could result in a penalty of 25% of the amount not withdrawn—a potentially costly oversight for those living on fixed retirement incomes.

This article explains what RMDs are, why they exist, who must comply, and how to meet the IRS deadline to avoid penalties and tax complications.

What Are Required Minimum Distributions (RMDs)?

RMDs are the minimum amounts that retirees must withdraw annually from certain tax-deferred retirement accounts. The government enforces this rule to begin collecting taxes on retirement savings that have grown tax-free over the years.

Originally, RMDs began at age 70½, but the SECURE Act of 2019 raised the starting age to 72, and the SECURE 2.0 Act of 2022 increased it further to 73, effective for anyone turning 73 in 2023 or later.

This rule applies to:

• Traditional IRAs

• 401(k) and 403(b) plans

• SEP and SIMPLE IRAs

• Other employer-sponsored plans

Roth IRAs are exempt from RMDs during the owner’s lifetime, though Roth 401(k)s only became exempt starting in 2024.

Why April 1, 2025 Matters

For retirees who turned 73 in 2024, the first RMD must be taken no later than April 1, 2025. However, your second RMD (for the 2025 tax year) is still due by December 31, 2025.

That means delaying your first RMD until April could result in two taxable distributions in one year, potentially:

• Increasing your income tax liability

• Bumping you into a higher tax bracket

• Affecting your Medicare premiums and the taxability of your Social Security benefits

Who Is Required to Take an RMD in 2025?

You must take an RMD by April 1, 2025, if:

• You turned 73 anytime in 2024

• You own tax-deferred retirement accounts

• You are no longer employed (401(k)s may be deferred while still employed with the plan sponsor)

How to Calculate Your RMD

To calculate your RMD:

1. Find the balance of your retirement account(s) as of December 31, 2024.

2. Divide that amount by the distribution period factor for your age found in the IRS Uniform Lifetime Table.

Example:
If your Traditional IRA had $200,000 on December 31, 2024, and the factor at age 73 is 26.5, then:

$200,000 ÷ 26.5 = $7,547.17
That amount must be withdrawn to avoid penalties.

If you miss this distribution, the IRS may charge a 25% excise tax—$1,886.79 in this case. However, the penalty can be reduced to 10% if corrected in a timely manner and reported using Form 5329.

Steps to Meet the RMD Requirement

1. Verify Your Eligibility

Check your birth year. If you turned 73 in 2024, you are required to take an RMD in 2025.

2. Calculate Accurately

Use IRS tools or consult a financial planner to determine the correct withdrawal amount.

• Multiple IRAs? You can aggregate your RMD total and withdraw from one account.

• Multiple 401(k)s? You must withdraw the correct amount from each individual account.

3. Take the Distribution Early

Don’t wait until April 1, 2025. Processing delays or calculation errors can cause you to miss the deadline.

• Many financial institutions offer automated RMD services—take advantage of them.

4. Account for Taxes

RMDs are taxed as ordinary income and may:

• Increase your tax bill

• Affect your Medicare premiums

• Make more of your Social Security benefits taxable

Tip: Consider taking your first RMD in late 2024 to avoid doubling your income in 2025.

5. File Form 5329 If You Miss the Deadline

Mistakes happen. If you fail to take the correct amount, submit Form 5329 with an explanation. The IRS may waive part of the penalty if you act quickly.

Common Mistakes to Avoid

• Delaying the RMD until the last minute

• Forgetting about old retirement accounts from former employers

• Assuming Roth 401(k)s are exempt (they are only exempt starting in 2024)

• Misapplying RMD rules between IRAs and employer-sponsored plans

• Miscalculating due to poor record-keeping or using the wrong IRS table

How Financial Professionals Can Help

Managing RMDs across multiple accounts can get complicated. Consider professional help if:

• You have multiple IRAs and 401(k)s

• You want to minimize your tax impact

• You’re unsure about how to time distributions

Certified Financial Planners (CFPs) and Certified Public Accountants (CPAs) can create strategies to optimize your withdrawals, possibly including:

• Qualified Charitable Distributions (QCDs) to reduce taxable income

• Income spreading to stay in a lower tax bracket

• Using Roth conversions in advance to lower future RMD amounts

Major financial institutions like Vanguard, Schwab, and Fidelity offer free tools and calculators to estimate RMDs.

Planning Ahead: The Long-Term View

Taking your RMD on time isn’t just about avoiding a penalty. It’s a key component of your long-term retirement strategy. Late or missed RMDs could derail your budgeting, tax planning, and even your eligibility for government programs.

• Create a withdrawal calendar to track deadlines

• Coordinate with your tax advisor each year

• Review your retirement accounts annually

FAQs: Social Security and RMDs

Q1: Do I need to take RMDs from all retirement accounts?
Yes. IRAs can be aggregated, but each 401(k) must be calculated and withdrawn individually.

Q2: Are Roth accounts subject to RMDs?
Roth IRAs are not. Roth 401(k)s were subject to RMDs until 2023. Starting in 2024, they are exempt.

Q3: What if I’m still working?
You may defer RMDs from a current employer’s 401(k), but not from IRAs or old employer plans.

Q4: Can I donate my RMD to charity?
Yes. Use a Qualified Charitable Distribution (QCD) to donate up to $100,000 per year tax-free.

Q5: What happens if I miss the deadline?
The IRS can impose a 25% penalty, reducible to 10% if corrected with Form 5329 and a reasonable explanation.

Final Thoughts

If you’re 73 or turning 73 in 2024, don’t let the April 1, 2025 RMD deadline sneak up on you. The 25% penalty for non-compliance is substantial, but avoidable with the right planning. From understanding the rules to calculating and taking your distribution, every step matters. Talk to your financial advisor, use the IRS worksheets, and act early to keep your retirement on track.