Quick Read
- Many retirees who turned 73 in 2025 missed the April 1, 2026 deadline for their first Required Minimum Distributions (RMDs).
- Those 74 or older in 2025 missed their RMD deadline on December 31, 2025.
- Missing an RMD incurs a 25% IRS penalty on the unwithdrawn amount, potentially reducible to 10% if corrected within two years.
- RMDs are calculated by dividing the December 31, 2024 account balance by a factor (e.g., 26.5 for age 73).
- Individuals who missed their 2025 RMD must take it, file Form 5329, and will still need to take their 2026 RMD by December 31, 2026.
WASHINGTON (Azat TV) – Thousands of American retirees who turned 73 in 2025 may have missed the crucial April 1, 2026 deadline to take their first Required Minimum Distributions (RMDs) from traditional Individual Retirement Accounts (IRAs) and 401(k)s. This oversight can trigger significant penalties from the Internal Revenue Service (IRS), necessitating immediate action to mitigate financial repercussions.
For those who were 74 or older in 2025, the deadline to take their 2025 RMDs was December 31, 2025, meaning they are already subject to penalties if the distribution was not made. The IRS mandates these annual withdrawals from most tax-deferred retirement accounts to ensure taxes are eventually paid on the deferred income. Failing to comply with these rules can result in a steep penalty, initially set at 25% of the amount not taken.
Understanding Required Minimum Distributions (RMDs)
Required Minimum Distributions are mandatory withdrawals that individuals must start taking from their traditional IRAs, 401(k)s, and other tax-deferred retirement plans once they reach a certain age. This age was recently adjusted from 72 to 73 under the SECURE Act 2.0. The purpose of RMDs is to prevent individuals from indefinitely delaying taxes on their retirement savings.
The calculation of your RMD depends on your account balance and your age. For those who turned 73 in 2025, the first step involves determining the account balances as of December 31, 2024. This amount is then divided by a distribution period factor found in the IRS’s Uniform Lifetime Table. For individuals who turned 73 in 2025, this factor is 26.5. For example, an individual with $100,000 in a traditional IRA would divide that by 26.5, resulting in an RMD of approximately $3,774.
Penalties for Missed RMDs and How to Rectify
The consequences for missing an RMD are substantial. The initial penalty is 25% of the amount that should have been withdrawn. However, the IRS offers a path to reduce this penalty to 10% if the issue is corrected within a two-year window. To do so, individuals must take the missed RMD and file Form 5329, ‘Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts,’ with their 2025 tax return, explaining the error.
In some specific cases, the IRS may even waive the penalty entirely if an individual can demonstrate that the failure to take the RMD on time was due to a reasonable error and that steps are being taken to address the problem. This typically requires including a letter of explanation with Form 5329. It is important to note that if a 2025 RMD was missed and is now being taken in 2026, the individual will also be required to take their 2026 RMD by December 31 of this year, effectively resulting in two distributions within a single tax year.
Navigating Retirement Taxation Beyond RMDs
While RMDs are a critical component of retirement planning, retirees often face other complex tax situations. These can include the taxation of Social Security benefits, which can be up to 85% taxable depending on combined income thresholds that remained unchanged for 2025 and 2026. Income from pensions and annuities also has specific tax rules, varying based on whether after-tax contributions were made.
Given the intricacies of retirement taxation, many financial experts recommend consulting with a qualified tax professional or utilizing robust tax software. Services like TurboTax, H&R Block, and FreeTaxUSA offer guided processes that can help retirees navigate these complex calculations, ensure compliance, and identify potential deductions or credits. These tools can be particularly helpful in correctly reporting income from various sources and ensuring RMDs are properly accounted for, minimizing the risk of penalties.
The evolving landscape of retirement taxation, particularly the strict enforcement of Required Minimum Distributions, underscores the critical need for retirees to remain vigilant and proactive in managing their financial affairs. The recent deadlines highlight how seemingly minor oversights can lead to significant financial penalties, emphasizing that professional guidance or diligent use of tax resources is not just a convenience but an essential safeguard for long-term financial stability.