The age at which the government forces savers to start emptying their tax-deferred retirement accounts has climbed to 73, giving many workers an extra window to let their money grow before the withdrawals begin. The change arrived through the SECURE 2.0 law, which also schedules another increase to 75 in 2033. The later start is welcome, but it comes attached to one of the harshest penalties in the tax code: miss a required withdrawal, and the shortfall can be taxed at 25 percent, on top of the ordinary income tax still owed on the money.
The move from 72 to 73, and later to 75
Required minimum distributions exist because traditional retirement accounts defer taxes for decades, and the government eventually wants its share. For years the starting age was 70 and a half, then 72, and SECURE 2.0 pushed it to 73 for savers reaching that age in 2023 or later. Anyone born in 1960 or afterward will see the threshold rise again to 75 beginning in 2033.
The rule applies to traditional IRAs and most workplace plans, including traditional 401(k)s and 403(b)s. The Internal Revenue Service’s overview of required minimum distributions spells out that a first withdrawal can be delayed until April 1 of the year after a saver turns 73, though doing so forces two distributions into that second year, which can inflate a single year’s taxable income and, in turn, Medicare premiums.
Not every account is caught in the net. Roth IRAs never required lifetime withdrawals, and as of 2024 the same relief extends to Roth 401(k)s. The guidance covering designated Roth accounts confirms that these balances can sit untouched during the owner’s life, which is why the required-distribution machinery falls entirely on the pretax side of a saver’s holdings.
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The penalty for missing a withdrawal
The consequence for skipping a required distribution is unusually steep. The tax code imposes an excise tax equal to 25 percent of the amount that should have been withdrawn but was not, a figure that can dwarf the ordinary income tax on the same money. That penalty is what makes the annual calculation more than a formality for retirees juggling several accounts.
SECURE 2.0 did add a meaningful escape hatch. If a saver corrects the mistake promptly, generally by taking the missed amount and filing the proper form within a two-year correction window, the penalty drops from 25 percent to 10 percent. The reduction rewards quick action, but it still leaves a real cost, and it does nothing to erase the regular income tax that applies once the overdue distribution is finally taken.
The arithmetic of a missed distribution grows more dangerous with multiple accounts. A saver can total the required amounts across several IRAs and withdraw the sum from any one of them, but workplace plans generally must each satisfy their own requirement separately. That difference trips up retirees who assume one withdrawal covers everything, and the penalty attaches to whatever slips through.
The obligation does not end when the original owner dies. An inherited account carries its own required-distribution rules, and the IRS guidance on distributions for beneficiaries extends the same 25 percent excise, reduced to 10 percent when corrected in time, to heirs who overlook a mandated withdrawal. A family settling an estate can easily miss a first-year deadline in the confusion after a death, which is why the penalty structure follows the money into the next generation rather than stopping at the grave.
Why the later start is not the same as relief
Pushing the start age to 73, and eventually 75, hands savers more time for tax-deferred growth, but it also lets larger balances accumulate, which means bigger mandatory withdrawals once the clock does start. A retiree who reaches 73 with a substantial traditional IRA may find the first required distribution large enough to lift them into a higher bracket or trigger income-based Medicare surcharges.
Some savers respond by drawing down or converting pretax balances in the lower-income years between leaving work and reaching the required age, smoothing what would otherwise be a spike. That approach carries its own tax cost in the near term and is not right for everyone, but it illustrates why the later start age changes the timing of the tax bill without eliminating it.
The size of that first distribution is set by a formula, not by choice. The IRS divides the prior year-end account balance by a life-expectancy factor from its published tables, so a larger balance and a younger required-beginning age both push the mandatory amount higher. A saver who spent an extra year or two letting the account grow before 73 will see that growth reflected in every distribution that follows, which is the quiet cost tucked inside the more generous starting age.
The core takeaway is that a higher starting age rewards patience while raising the stakes of a single oversight. The withdrawals are unavoidable on the pretax side, the penalty for forgetting is severe even after the recent reduction, and the money that finally comes out is taxed as ordinary income regardless. For retirees with several accounts, and for the heirs who inherit them, the annual distribution is a deadline worth treating with the same seriousness as any tax filing, because the cost of missing it now falls hardest on the people the savings were meant to support.
This article was produced with AI assistance and reviewed against primary sources by The Money Overview editorial team.
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