RMD Deadlines: When They Start and What a Miss Costs
The tax break on a traditional IRA or 401(k) was never a gift. It was a deferral — the government let you skip taxes going in, on the understanding that it collects on the way out. At age 73, that understanding comes with deadlines attached.
Required minimum distributions now start at age 73. The first one is due by April 1 of the year after you reach 73; every one after that is due by December 31. Missing a deadline triggers a 25% excise tax on the shortfall, cut to 10% if corrected within two years. Roth IRAs are exempt while the owner is alive.
What Required Minimum Distributions Are
A required minimum distribution, or RMD, is the smallest amount that must come out of a retirement account each year once the rules say withdrawals have to begin. The IRS is blunt about why: you cannot keep retirement funds in your account indefinitely. Under current law, that clock starts at age 73.
The rules cover traditional IRAs, SEP IRAs, and SIMPLE IRAs, plus the employer side — 401(k)s, 403(b)s, 457(b)s, profit-sharing plans. The amount itself comes from IRS life-expectancy tables, and a custodian or plan administrator may run that math for you. This article stays on the deadlines, because the deadlines are where people get hurt.
One detail worth sitting with: even when the custodian calculates the number, the IRS holds the account owner responsible for taking the correct amount on time. The paperwork can be outsourced. The liability cannot.
The Two Deadlines: April 1, Then December 31
Your first RMD covers the year you reach age 73, and it comes with extra time: the deadline is April 1 of the following year. Every RMD after that is due by December 31 of its own year. That first-year grace period is the only one you ever get.
When I first read the April 1 rule, I assumed it was a favor. It’s closer to a trap with a bow on it, because the grace period doesn’t move the second deadline at all.
The IRS’s own example makes the problem plain. John turned 73 on August 20, 2024, so his 2024 RMD was due by April 1, 2025 — but his 2025 RMD was still due by December 31, 2025. Waiting until April meant two taxable distributions landing in the same calendar year.
The rules do leave an opening: a first RMD taken by December 31 of the year you turn 73, rather than the following April 1, lands in its own tax year. The IRS notes this puts the two distributions into separate tax years.
Which timing works out better varies with a person’s full tax picture. That’s a question for a tax professional, not a blog post — but the mechanics above are the whole choice.
The Penalty for a Missed RMD
Miss a deadline, or take out too little, and the shortfall gets hit with a 25% excise tax. Not the whole account — the amount that was supposed to come out and didn’t. Still, as federal penalties go, this one is severe.
There is a partial escape hatch. If the missed amount is corrected within two years, the excise tax drops from 25% to 10%. Better, certainly, but 10% of a five-figure distribution is real money lost to an error that bought nothing.
The IRS’s own FAQ warns that account owners “may face stiff penalties” for failing to take RMDs, which is about as close to a flashing light as tax guidance gets. The penalty is the enforcement arm of the original bargain: deferral was always temporary.
Which Accounts Are Exempt
Roth IRAs are the big exemption. No RMDs are required from a Roth IRA while the owner is alive, and the same goes for designated Roth accounts inside a 401(k) or 403(b) plan. That money can sit untouched for as long as the owner lives.
The exemption has a hard boundary, though. Once the owner dies, beneficiaries of Roth IRAs and designated Roth accounts are subject to the RMD rules. For account owners who died after December 31, 2019, the SECURE Act generally requires the entire balance to go to beneficiaries within ten years — with exceptions for a surviving spouse, a child who hasn’t reached the age of majority, a disabled or chronically ill person, or someone not more than ten years younger than the owner.
So “exempt” means exempt during your lifetime. It does not mean the money escapes the distribution rules forever.
IRAs vs. Workplace Plans: Where the Rules Differ
The starting age is the same everywhere, but the mechanics split in two places. The first is aggregation — whether multiple accounts can be treated as one pool for withdrawal purposes.
For IRAs, the answer is yes. The RMD is calculated separately for each IRA a person owns, but the combined total can be taken from any one of them, or any mix. 403(b) contracts work the same way: figure each one, then take the total from whichever contracts you choose.
401(k)s and 457(b)s get no such treatment. Each plan’s RMD must be calculated for that plan and withdrawn from that plan, separately. And the two systems never offset each other — the IRS’s example notes that an RMD taken from an IRA doesn’t affect the RMD still due from a retirement plan.
The second split is timing for people still on the job. Participants in a workplace plan can generally delay their RMDs until the year they retire, unless they own 5% of the business sponsoring the plan; the IRS illustrates this with Jodie, who retires on their 73rd birthday, December 31, 2024, and owes a first plan RMD by April 1, 2025. Traditional IRA, SEP, and SIMPLE IRA owners get no working delay — their RMDs begin at 73 either way.
One caution before counting on that delay: a plan document may require distributions to begin at 73 even for someone still employed. The law permits the delay; an individual plan doesn’t have to offer it.
What This Means as You Approach 73
The rules treat account type as destiny. A traditional IRA, an old 401(k), and a Roth IRA sitting side by side at the same brokerage follow three different sets of requirements — one aggregates, one stands alone, one has no lifetime requirement at all. Knowing which label sits on each account is most of the battle.
The first-year timing question — April 1 or December 31 — is the one decision the calendar forces on everyone who reaches 73 with these accounts. It shifts taxable income between two years, and the better answer depends on brackets, other income, and details no article can see. That is precisely what a qualified tax professional is for.
Money leaving a retirement account often lands in an ordinary bank account, where a different set of rules protects it — we’ve walked through those in How FDIC Insurance Really Protects Your Money.
Honestly, the RMD system is simpler than its reputation. One starting age, two deadlines, one penalty with a discount for fixing mistakes, one lifetime exemption. The complexity people dread lives mostly in the calculation tables — the deadlines fit on an index card, and the index card is the part that carries the 25% price tag.
This article is general information, not professional advice. For decisions about your money or health, consult a qualified professional.