At age 73 (born 1951–1959) or 75 (born 1960 or later), the IRS requires you to start withdrawing from your Traditional IRA — whether you need the money or not. Here's what that really costs you.
An RMD — Required Minimum Distribution — is a mandatory annual withdrawal from your Traditional IRA, 401(k), or other tax-deferred retirement account once you reach age 73 (or 75 under SECURE 2.0 rules). The IRS calculates your minimum withdrawal based on your account balance and a "life expectancy factor" from their actuarial tables.
The key word is required. You cannot choose to skip or delay. And the withdrawals count as ordinary income — taxed at your marginal rate. If you don't take the distribution, the penalty is 25% of the amount you should have withdrawn.
Your RMD = Account Balance ÷ IRS Life Expectancy Factor. The factor shrinks every year, forcing you to withdraw a larger percentage. Under SECURE 2.0, RMDs begin at age 73 if you were born between 1951 and 1959, and age 75 if you were born in 1960 or later. If you were born in 1950 or earlier, your RMDs already began under the prior rules.
| Age | IRS Divisor | % Forced Out | RMD on $1M | Note |
|---|---|---|---|---|
| 73 | 26.5 | 3.8% | $37,736 | Born 1951-1959 |
| 75 | 24.6 | 4.1% | $40,650 | Born 1960 or later |
| 76 | 23.7 | 4.2% | $42,194 | — |
| 78 | 22.0 | 4.5% | $45,455 | — |
| 80 | 20.2 | 5.0% | $49,505 | — |
| 83 | 17.7 | 5.6% | $56,497 | — |
| 85 | 16.0 | 6.3% | $62,500 | — |
| 88 | 13.7 | 7.3% | $72,993 | — |
| 90 | 12.2 | 8.2% | $81,967 | — |
*IRS Uniform Lifetime Table, Publication 590-B Appendix B Table III. Divisors effective for distribution years 2022 onward. Dollar figures assume a $1,000,000 prior-year-end balance.
Higher Tax Brackets
RMDs push your income up — even if you don't need the cash. A $2M IRA at age 80 forces ~$99,000 out annually. That alone can bump you into the 22–24% bracket.
IRMAA Medicare Surcharges
RMD income counts toward your MAGI, which determines your Medicare Part B and D premiums. Cross certain thresholds and you pay $500–$600+ more per month per person.
Social Security Taxation
Up to 85% of your Social Security benefit becomes taxable when your combined income (including RMDs) exceeds $44,000 for married couples. This can create an effective marginal rate exceeding 40%.
Compounding Drain
Every dollar you're forced to pull out stops compounding. Over 15 years of RMDs, a $1M IRA loses significant growth potential — not just the tax, but the lost returns on what was taxed.
Roth IRAs have no RMDs during your lifetime. By converting your Traditional IRA to a Roth before age 73–75, you eliminate the forced withdrawal problem entirely. You choose when — and whether — to take distributions.
The IRS requires you to withdraw a minimum amount from your IRA each year. Find out what your Required Minimum Distribution will be.
A Roth conversion strategy can remove the forced withdrawal problem for good. Book a free call to see if it's right for you.