Americans who turned 73 in 2025 face a federal deadline that did not exist for the previous cohort of retirees: they must begin pulling money out of traditional IRAs or face steep tax penalties. The trigger is Section 107 of the SECURE 2.0 Act of 2022, enacted as Division T of the Consolidated Appropriations Act, 2023, which pushed the required minimum distribution start age from 72 to 73 effective in 2023 and scheduled a further increase to 75 in 2033. For anyone reaching 73 this year, the first withdrawal is due by April 1, 2027, but waiting that long creates a tax trap: two taxable distributions could land in the same calendar year.
Why the two-year RMD delay changes retirement tax math
Under prior law, account holders began mandatory withdrawals at 72. The SECURE 2.0 shift to 73 gives traditional IRA owners an extra year of tax-deferred growth, but it also compresses the distribution schedule once withdrawals start. The IRS calculates each year’s required amount by dividing the prior year-end account balance by a life expectancy factor published in its tables. A larger balance at the starting line means larger annual payouts and, in many cases, a higher marginal tax bracket during the distribution years.
That compression carries estate-planning consequences. When an account owner dies before exhausting a traditional IRA, the remaining balance passes to beneficiaries, who face their own withdrawal timelines and tax bills. A later RMD start means more owners will hold larger balances at death, routing more assets into spousal or non-spousal beneficiary rollovers rather than the owner’s own taxable income stream. No federal dataset yet quantifies how many IRA holders have delayed first distributions under the revised age threshold, but the structural incentive is clear: every additional year of deferral increases the odds that a sizable balance transfers at death rather than during the owner’s lifetime.
Statutory text, IRS tables, and the April 1 deadline
The age-73 threshold is written into Section 401(a)(9) of the Internal Revenue Code, which defines the “applicable age” for RMDs after the SECURE 2.0 amendments. The IRS explains the practical mechanics on its required minimum distribution page: the first RMD is required for the year an individual reaches 73, and the “required beginning date” for that initial withdrawal is April 1 of the following year. Every subsequent distribution must be completed by December 31 of each calendar year.
The April 1 grace period is where many retirees stumble. Someone who turns 73 in 2026, for instance, could wait until April 1, 2027, to take the first distribution. But the second-year RMD for 2027 is still due by December 31, 2027. That forces two taxable withdrawals into one tax year, potentially pushing income into a higher bracket and increasing Medicare premium surcharges. The IRS flags this risk in its explanations of how timing choices can affect annual taxable income.
Calculation details sit in Publication 590-B, whose Appendix B contains the official life expectancy tables. Those tables were themselves updated by a Treasury regulation published in the Federal Register in 2020; the final rule, available through the federal rulemaking docket, lengthened life expectancy factors starting in 2022, slightly reducing annual RMD amounts compared with prior tables. For retirees now hitting age 73, that means each year’s required withdrawal is calculated using more generous divisors, but the larger balances created by the delayed start can still lead to sizable payouts.
Tax penalties and recent relief
The tax code backs the RMD regime with a punitive excise tax on shortfalls. If a retiree fails to withdraw the full required amount in a given year, the missing portion is subject to an additional tax that Congress recently softened. Before SECURE 2.0, the penalty was 50 percent of the undistributed amount; the new law generally reduces it to 25 percent, and in some cases 10 percent if the error is corrected in a timely manner. Even at the lower rate, the charge can be substantial for retirees with six-figure IRA balances who overlook their first mandatory withdrawal.
The IRS has periodically offered administrative relief for inadvertent failures, especially when new rules or updated tables create confusion. Taxpayers who discover an error can request a waiver of the excise tax by filing the appropriate form and attaching an explanation. The agency’s online account system, accessible through the individual account portal, allows retirees or their advisors to review posted tax payments and notices, but it does not calculate or track RMD obligations on their behalf. That responsibility remains with the account owner, even when financial institutions provide reminder letters or automatic withdrawal services.
Planning around the new age 73 threshold
The shift to age 73 creates a window in the late 60s and early 70s when many retirees have relatively low taxable income but still control large pre-tax balances. Advisors increasingly use that period for partial Roth conversions or voluntary withdrawals that smooth lifetime tax burdens. Spreading income across more years can help keep both RMDs and future Medicare premiums in check once mandatory distributions begin.
For those turning 73 in 2025, the key decisions center on timing and coordination with other income sources. Taking the first RMD in 2025 avoids the double-withdrawal issue in 2026, but accelerates taxable income. Deferring until early 2026 buys a few more months of tax-deferred growth but risks stacking two RMDs into one year and triggering higher marginal rates. Because Social Security benefits, pensions, and part-time earnings all feed into the same tax calculation, the optimal choice depends on the retiree’s broader financial picture.
What has not changed is the basic structure: traditional IRAs are designed to shift untaxed savings into taxable income during retirement, and the RMD rules enforce that shift on a schedule that is now slightly later but still rigid. Retirees who understand the April 1 deadline, the annual December 31 cadence, and the potential for bracket creep have more room to plan, while those who ignore the revised age threshold may find that the extra year of deferral comes with unexpected costs.
