The IRS forces retirees with substantial savings to withdraw increasing amounts from retirement accounts starting at age 73. These mandatory withdrawals, called Required Minimum Distributions (RMDs), grow larger as you age and can create unexpected tax bills.
For someone with exactly $1 million in retirement accounts, the RMD math looks like this. At age 73, you withdraw roughly $36,500 using the IRS life expectancy table. By age 75, that jumps to about $39,100. At 80, expect roughly $47,600. By age 85, the annual RMD climbs to approximately $58,800.
The calculation uses a simple formula. The IRS divides your account balance on December 31 of the prior year by a "distribution period" factor tied to your age. The older you get, the smaller the distribution period becomes, forcing out more money each year.
This matters because RMDs are taxable income. If you earned $60,000 from a pension and the IRS forces you to withdraw $47,600 from your 401(k) at age 80, your taxable income jumps to $107,600. You could face a bigger tax bill, lose tax credits, or trigger higher Medicare premiums based on income thresholds.
The RMD rules changed in 2023. The age when withdrawals start pushed back from 72 to 73. For those turning 75 after 2032, the starting age becomes 75. Anyone turning 73 between 2024 and 2032 faces the current 73-year-old rule.
Retirees have limited escape routes. You cannot skip or reduce an RMD. You cannot avoid the tax. You can donate to charity directly from your IRA if over 72, which satisfies the RM