IRS reminds some seniors about an important deadline on April 1: the actions that must be taken to avoid a penalty"

The IRS is warning some seniors that depending on what type of retirement account you have, you’ll have to begin withdrawing a minimum amount once you reach this age.

Greg Heilman Maite Knorr-Evans

Update: Mar 27th, 2025 06:03 EDT

“You cannot keep retirement funds in your account indefinitely,” states the Internal Revenue Service. Depending on what type of retirement account you have, you’ll have to begin withdrawing a minimum amount each year at a certain age, others once the owner of the account has died.

There are specific dates as well for when you must have withdrawn a determined required minimum distribution (RMD) from your retirement account. Those annual drawdowns may affect your tax declarations each year for retirees, or beneficiaries of an inherited account. We’ll walk you through the basics.

What is a required minimum distribution? Can it affect your taxes?

The SECURE 2.0 Act made changes to when individuals must begin taking a required minimum distribution.

Before the legislation was passed, those who turned 72 before 1 January 2023 had to start withdrawing a determined amount of funds from the types of retirement accounts listed below by 1 April 2024—the year after they reached RMD age.

Minimum distribution rules apply to original account holders and their beneficiaries in these types of plans:

traditional IRAs
SEP IRAs
SIMPLE IRAs
401(k) plans
403(b) plans
457(b) plans
profit sharing plans
other defined contribution plans
Roth IRA beneficiaries

Now, the same rules apply to those who turned 73 in 2024, with the IRS stating that these individuals are required to make their RMD by April 1, 2025.

After your first RMD, all successive RMDs must be withdrawn by 31 December. Account holders can take out more than the minimum amount if they choose.

Why do these rules exist?

Required minimum distributions are designed to prevent taxpayers from deferring taxes on pre-tax income put into retirement accounts indefinitely. The withdrawals will be treated as taxable income in the year they were taken from a retirement account. That is unless the money was taxed previously or can be received tax-free, such as qualified distributions from designated Roth accounts.

The standard IRS income tax brackets based on your adjusted gross income will apply for the amount of tax that you will be on the hook for. So the amount that you take out could potentially put you into a higher tax bracket.

How to calculate required minimum distributions

Calculating the correct RMD amount is important as the IRS will apply a 25% excise tax on the amount not withdrawn. That may possibly drop to “10% if the RMD is timely corrected within two years,” according to the IRS.

You can calculate your required minimum distribution using one of the three tables provided by the IRS, these include the Joint and Last Survivor table, Uniform Lifetime Table and Single Life Expectancy Table. Which table you must use depends on your particular situation indicated below.

Last Survivor Table: Married, spouse is sole beneficiary of the account and if spouse is more than 10 years younger than account owner
Uniform Lifetime Table: All other original IRA owners
Single Life Expectancy Table: Inherited an IRA

Your required minimum distribution amount is calculated for the current year by dividing your account balance at the end of last year by your life expectancy found on the IRS tables. To make the task slightly easier, Nerdwallet provides an online RMD calculator that you can use. These tools are helpful to ensure you compliance and won’t be charged any fees or penalties.

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