Retirement savers born in 1951 or later gained an extra year before the IRS requires them to start pulling money out of tax-deferred accounts. Under the SECURE 2.0 Act, the age at which required minimum distributions must begin shifted from 72 to 73 for anyone who reached age 72 after December 31, 2022. That one-year delay lets account balances compound longer, but it also creates a timing trap that could push some retirees into higher tax brackets if they are not careful.
Why the shift from age 72 to 73 changes retirement math right now
The practical effect is straightforward: an account owner who turns 73 in 2024 does not owe a first RMD until April 1, 2025, according to IRS guidance. Under the old rule, that same person would have faced mandatory withdrawals a full year earlier. The extra 12 months of tax-deferred growth can be meaningful for large IRA or 401(k) balances, especially in years when markets rise.
But delaying the first distribution creates a well-documented risk. Anyone who waits until April 1 of the following year to take a first RMD must then take a second distribution by December 31 of that same calendar year. Two taxable withdrawals landing in one year can inflate adjusted gross income, potentially triggering higher Medicare premiums and reducing eligibility for certain deductions. The IRS spells out this two-RMD scenario on its retirement topics page.
The hypothesis that delayed first RMDs would produce visibly larger year-end 2024 IRA balances is plausible on paper. Account owners who no longer needed to withdraw in 2024 would logically report higher December 31 values on Form 5498 filings the following year. No public IRS dataset has yet confirmed this pattern, however, because aggregate filing data for the 2024 tax year has not been released. The signal, if it exists, would show up as a one-year bump in reported IRA assets among newly eligible 73-year-olds compared with the prior cohort that began distributions at 72.
How the IRS calculates each year’s required withdrawal
Each RMD is determined by dividing the account balance as of the prior December 31 by a life-expectancy factor from the Uniform Lifetime Table, according to a Congressional Research Service brief. A larger year-end balance produces a larger mandatory withdrawal, which means the extra year of growth also raises the size of the first distribution once it finally comes due.
The penalty for missing or underpaying an RMD remains steep. The excise tax is 25 percent of the shortfall, though it drops to 10 percent if the account owner corrects the error in a timely manner. That reduced penalty structure, introduced alongside the age-73 change, gives savers a narrower window to fix mistakes before the full tax hits.
The SECURE 2.0 law also set a future increase to age 75 for certain younger cohorts, further extending the horizon before mandatory withdrawals begin. For people still in their 50s and early 60s, that means more years of tax-deferred growth but also a longer period in which balances can swell, potentially leading to larger eventual RMDs and higher taxable income later in retirement.
Planning around the new RMD timetable
For those now subject to the age-73 rule, the decision is no longer just when to retire but when to start taking distributions. Some may choose to take voluntary withdrawals in the gap years between retirement and their first required distribution to smooth out taxable income. Spreading withdrawals over more years can reduce the risk of large RMDs bunching up in later years when Social Security benefits and other income sources are also fully in play.
Others may decide to delay as long as possible, betting that investment returns and lower current spending needs outweigh the risk of larger future withdrawals. That strategy can make sense for retirees with substantial non-retirement assets or those who expect lower tax rates later, but it requires careful modeling of future RMDs, Medicare premium thresholds, and the potential impact on surviving spouses or heirs.
The new timetable also affects estate planning. Larger pre-tax balances left to beneficiaries can translate into higher taxable income for heirs, who generally must empty inherited retirement accounts within a limited period. Some retirees may respond by pairing the later RMD age with strategies such as partial Roth conversions in lower-income years, accepting tax now to reduce future required withdrawals and potential burdens on beneficiaries.
Regardless of strategy, the move from age 72 to 73 underscores the importance of tracking year-end account values and understanding how they feed into the IRS life-expectancy tables. With penalties still significant and the possibility of two distributions falling in the same year, retirees who simply wait for their custodian’s notice risk being surprised by the size and timing of their required withdrawals.
