RMD Rules After Age 73: Everything People Miscalculate

Required Minimum Distributions (RMDs) are the IRS's way of forcing you to withdraw—and pay taxes on—your retirement savings after a certain age. In 2025, that age is 73, raised from 72 in prior years.

Most retirees understand the basic idea: you turn 73, you must start taking withdrawals from traditional IRAs and 401(k)s. But the details trip up thousands of people annually. A single miscalculation can trigger penalties as high as 25% of the amount you failed to withdraw—far more severe than the income tax owed on the distribution itself.

This comprehensive guide reveals where most people miscalculate, what changed in 2025, and how to avoid devastating penalties.

The RMD Timeline: Critical Deadlines You Cannot Miss

The IRS sets strict deadlines for RMDs, and missing them is expensive:

First RMD Deadline:

If you turn 73 in 2025, your first RMD must be withdrawn by April 1, 2026.

This is a one-time exception. If you turn 73 on December 31, 2025, you still have until April 1, 2026 to withdraw your first RMD.

All Subsequent RMDs:

After your first RMD, all future RMDs are due by December 31 of each year.

Example timeline:

• Turn 73 on June 15, 2025
• First RMD due: April 1, 2026
• Second RMD due: December 31, 2026
• All future RMDs: December 31 each year

If you miss the first RMD deadline (April 1), or any subsequent RMD deadline (December 31), penalties apply immediately.

The Penalty for Missing RMDs: 25% of the Shortfall

This is where the pain kicks in. Under the SECURE Act 2.0 (effective 2023), the RMD penalty was reduced from 50% to 25%.

Even at 25%, this is severe:

Example: You should have withdrawn $50,000 but withdrew only $30,000.

• Shortfall: $20,000
• Penalty: 25% × $20,000 = $5,000

You owe both the $5,000 penalty AND the income tax on the $20,000 you should have withdrawn. Total damage: potentially $10,000+.

Reduced penalty: If you correct the mistake within two years, the penalty drops to 10%. So if you catch the error in 2026, you could owe only $2,000 instead of $5,000.

Complete waiver: The IRS may entirely waive the penalty if you demonstrate reasonable cause for the failure.

How to Calculate Your RMD: The Most Common Calculation Errors

RMD calculation requires two pieces of information: your IRA balance and your life expectancy factor.

The Formula:

RMD = IRA Balance (December 31 previous year) ÷ Life Expectancy Factor (from IRS table)

Example calculation:

• Your IRA balance on December 31, 2024: $500,000
• Your age on December 31, 2025: 73
• IRS life expectancy factor for age 73: 26.5
• RMD: $500,000 ÷ 26.5 = $18,868

This is the minimum you must withdraw in 2025.

Critical detail: The balance used is December 31 of the previous year, not the current year. If your IRA grows from $500,000 to $550,000 during 2025, you use the $500,000 figure, not $550,000.

Common RMD Calculation Mistakes

Mistake #1: Using the wrong life expectancy table

The IRS publishes three different life expectancy tables:

• Uniform Lifetime Table (for most IRA owners and plan participants)
• Single Life Expectancy Table (for inherited IRAs from non-spouse beneficiaries)
• Joint Life and Last Survivor Table (when spouse is the sole beneficiary and more than 10 years younger)

Most people use the wrong table, inflating or deflating their calculated RMD. Ask your brokerage or tax advisor which table applies to your situation.

Mistake #2: Using the current year's account balance instead of the prior year's

RMDs are always based on December 31 of the year before. Using the current year's balance (which might be much higher due to market gains) makes your RMD calculation wrong.

Mistake #3: Using the wrong IRS life expectancy factor

The IRS publishes updated life expectancy tables annually. The factor for age 73 in 2024 might differ slightly from 2025's factor. Always use the table for the year you're taking the RMD, not a table from memory or an old planning document.

Solution: Use an online RMD calculator from your brokerage or ask a tax professional to confirm your calculation before withdrawal.

Aggregation Rule: Multiple IRAs Can Be Managed Smartly

Many retirees have multiple IRAs: traditional IRAs, SEP IRAs, inherited IRAs, etc.

The aggregation rule states: You calculate the RMD for each traditional IRA separately, but you can aggregate them and withdraw the total from any combination of accounts.

Example:

• Traditional IRA: RMD of $20,000
• SEP IRA: RMD of $15,000
• Total RMD: $35,000

You can:

• Withdraw $35,000 from the traditional IRA (and $0 from the SEP)
• Withdraw $20,000 from traditional + $15,000 from SEP
• Withdraw $35,000 from the SEP (and $0 from traditional)

All three approaches satisfy the RMD requirement.

Critical exception: 401(k)s and 403(b)s do NOT aggregate with IRAs. If you have both a traditional IRA and a 401(k), you must calculate and take separate RMDs from each plan.

This trips up many people. They take $35,000 from their IRA thinking it covers their RMD, forgetting they also have a 401(k) RMD of $10,000 due separately.

New Rules for 2025: Inherited IRA RMDs

The SECURE Act changed inherited IRA RMD rules significantly, with new requirements starting in 2025.

The 10-Year Rule (unchanged from prior years):

If you inherit an IRA from someone who was already taking RMDs, you must empty the entire account by the end of the 10th year after inheritance.

The New 2025 RMD Requirement (critical change):

Starting in 2025, non-spouse beneficiaries must take annual RMDs in years 1-9 of the 10-year period, then a full distribution in year 10.

Example timeline for inheritance in 2024:

• Year 1 (2025): Calculate and take your RMD for year 1
• Year 2 (2026): Calculate and take your RMD for year 2
• (Continue through year 9)
• Year 10 (2033): Withdraw entire remaining balance

Prior confusion: Before 2025, it was unclear whether annual RMDs were required. The IRS waived penalties 2020-2024 for this confusion. Starting in 2025, penalties apply if you miss annual RMDs.

Calculation method: RMDs from inherited IRAs use the Single Life Expectancy Table and your age as the beneficiary, not the original owner's age.

Spouse Beneficiaries Get Special Treatment

Spousal beneficiaries have more flexible options than non-spouse beneficiaries:

Option 1: Treat the inherited IRA as your own

Roll the IRA into your own traditional IRA and treat it like a normal IRA. Your RMDs start at age 73.

Option 2: Treat yourself as the beneficiary

Keep the IRA in the original owner's name but take RMDs based on your life expectancy using the Single Life Expectancy Table.

Spouse beneficiaries should coordinate with a tax professional to choose the option minimizing their tax burden.

Delaying the First RMD: The April 1 Option (Rarely Optimal)

The IRS allows a one-time delay: if you turn 73 in 2025, you can take your first RMD by April 1, 2026 instead of December 31, 2025.

However, delaying almost always costs more:

If you delay first RMD to April 1, 2026:

• You owe two years of RMDs in 2026 (year 1 + year 2)
• This bunches income, pushing you into a higher tax bracket
• You lose the chance to spread RMD income across two years

Example damage:

• Year 1 RMD (owed in 2025, delayed): $20,000
• Year 2 RMD (owed in 2026): $21,000
• If you delay, you owe $41,000 in 2026, likely in a higher tax bracket
• If you'd taken the first RMD in 2025, you'd have spread the income across two years

The April 1 delay makes sense only in rare scenarios (e.g., you have a capital loss that offsets the RMD in the current year). For most people, take the RMD by December 31 of the year you turn 73.

Qualified Charitable Distributions (QCD): The RMD Tax Workaround

If you're age 73+ and charitably inclined, a Qualified Charitable Distribution can reduce your RMD tax burden:

• Directly distribute up to $10,000 annually from your IRA to a qualified charity
• This counts toward your RMD but is NOT included in your taxable income
• Reduces your RMD tax burden by your marginal tax rate

Example:

• Your RMD: $50,000
• QCD to charity: $10,000
• Taxable RMD: only $40,000
• Tax savings: $10,000 × your tax rate (e.g., 24% = $2,400 savings)

This is one of the most underused tax strategies for charitable retirees.

The Hidden RMD Mistake: Ignoring Inflation Impact

Here's what trips up many retirees: RMDs increase every year as you age (life expectancy factors decrease), and your account balance often grows.

30-year retirement example:

• RMD at age 73: $20,000
• RMD at age 80: $30,000 (due to lower life expectancy factor)
• RMD at age 90: $50,000+

Many retirees plan assuming RMDs stay flat, then face unexpected tax bills in their 80s when RMDs jump.

Solution: Model your future RMDs using a retirement calculator. Understand that RMDs compound annually, and budget for increasing tax bills over time.

Avoiding the "Minimum Only" Trap: Strategic Excess Withdrawals

Another costly mistake: taking only the RMD and no more, even when doing so creates a huge missed opportunity.

The trap: If you live into your 90s and your account keeps growing despite RMDs, you might end up with $5 million+ that you don't need, forcing massive RMDs that push you into the 37% tax bracket late in life.

Smart strategy: Consider withdrawing more than your RMD in years when you're in a lower tax bracket (e.g., early retirement years when you have no other income). This can reduce future RMDs and overall lifetime taxes.

The Bottom Line: Get Your RMD Right or Face Penalties

RMD miscalculations are one of the most expensive retirement planning mistakes. A single missed deadline or miscalculated amount can trigger penalties of $2,000-$5,000+.

Protect yourself:

• Set a calendar reminder for December 31 (or April 1 for your first RMD)
• Calculate your RMD using your brokerage's calculator or a tax professional
• Use the prior year's December 31 balance, not the current year's
• If you have multiple IRAs, aggregate them smartly
• If you have a 401(k), ensure you take its separate RMD
• Consider a QCD if you're charitable

RMDs aren't optional, and the penalties are punishing. Understanding these rules—and executing them precisely—protects your retirement and your legacy.