Social Security Alerts: As 2025 rapidly approaches, retirees who are receiving Social Security benefits or withdrawing funds from tax-deferred retirement accounts are being urged to pay close attention to an important financial deadline: April 1, 2025. If missed, retirees may be subject to a hefty 25% IRS penalty on missed Required Minimum Distributions (RMDs). This is not just a bureaucratic technicality—it’s a crucial rule for anyone aged 73 or older that can significantly affect your retirement income and tax liabilities.
Whether you’re managing your retirement accounts on your own or working with a financial planner, it’s essential to fully understand this requirement, why it exists, and how to make sure you’re in compliance. Let’s walk through everything you need to know to avoid unnecessary penalties and preserve your financial future.
Social Security Alerts
| Topic | Details |
|---|---|
| Deadline | April 1, 2025 |
| Who is Affected | Retirees who turned 73 in 2024 |
| What is Required | First Required Minimum Distribution (RMD) must be withdrawn |
| Penalty for Non-Compliance | 25% of the amount not withdrawn (can be reduced to 10% if corrected within two years) |
| Applies To | Traditional IRAs, 401(k)s, 403(b)s, and similar tax-deferred retirement accounts |
| Helpful Resource | IRS RMD Guidelines |
For retirees turning 73 in 2024, the upcoming April 1, 2025 deadline for your first Required Minimum Distribution (RMD) is more than just a date on the calendar—it’s a key step in maintaining your retirement strategy and staying on the IRS’s good side.
Missing this deadline can result in significant financial penalties and increased tax liabilities. By understanding the rules, calculating your RMD early, and seeking expert guidance, you can make sure your retirement funds are working for you, not against you.
What Are Required Minimum Distributions (RMDs)?
Required Minimum Distributions, or RMDs, are mandatory yearly withdrawals that retirees must take from certain types of retirement accounts, including Traditional IRAs, 401(k)s, 403(b)s, and similar tax-deferred plans. The IRS requires these withdrawals so that the government can begin collecting taxes on money that has grown tax-deferred over many years.
Initially, the required beginning age for RMDs was 70½, but that changed with the SECURE Act of 2019, which raised the age to 72. More recently, the SECURE 2.0 Act of 2022 pushed that age further to 73, effective for anyone turning 73 in 2023 or later. That means if you were born in 1951, you are now on the clock.
Importantly, these rules apply only to tax-deferred accounts. Roth IRAs, for instance, are excluded because contributions were made with after-tax dollars.
Why the April 1, 2025 Deadline Matters
If you turned 73 in 2024, the law requires that you take your first RMD by April 1, 2025. It might sound like you’ve got plenty of time, but there’s a critical caveat: your second RMD (for the year 2025) must still be taken by December 31, 2025. That could mean taking two withdrawals in the same tax year, which might push you into a higher tax bracket or affect your eligibility for certain benefits.
Example Scenario:
Imagine you have a Traditional IRA worth $200,000 as of December 31, 2024. Using the IRS’s Uniform Lifetime Table, the distribution factor at age 73 is 26.5. Your RMD would be calculated as:
$200,000 ÷ 26.5 = $7,547.17
If you fail to take this amount, the IRS could impose a 25% excise tax, or $1,886.79, on the amount you didn’t withdraw. However, if the error is corrected quickly and you file IRS Form 5329, the penalty may be reduced to 10%.
How to Meeting Your RMD Requirement
1. Determine If You’re Affected
You must take an RMD in 2025 if:
- You turned 73 in 2024
- You own any tax-deferred retirement accounts, including Traditional IRAs, 401(k)s, 403(b)s, and others
- You are no longer working (unless your 401(k) plan allows you to defer RMDs while still employed)
2. Calculate Your RMD Accurately
Use the account balance from December 31, 2024 and divide it by the distribution period listed in the IRS Uniform Lifetime Table. If you have multiple IRAs, you can calculate RMDs separately but aggregate the total and take it from one or more IRAs. This flexibility does not apply to 401(k)s—each must be handled individually.
Helpful Tool: IRS RMD Worksheet
3. Take the Distribution Before the Deadline
Schedule your withdrawal well before April 1, 2025. Many financial institutions offer automated RMD services that can help prevent late withdrawals.
Be sure to verify with your plan custodian if they offer this service—and double-check that the correct amount is being calculated and disbursed.
4. Understand the Tax Implications
RMDs are taxable as ordinary income, meaning they are added to your total income for the year. This may increase your total tax liability, bump you into a higher tax bracket, or affect:
- Medicare premiums (due to income-based surcharges)
- Social Security taxation (a higher percentage of your benefits may be taxed)
Pro Tip: If you’re facing two RMDs in 2025, consider taking the first one in late 2024 instead of waiting until April 2025 to avoid income stacking.
5. File IRS Form 5329 If Necessary
Missed your RMD? Don’t panic. File Form 5329, explain the reasonable cause, and show you’ve corrected the error. In many cases, the IRS may waive the penalty entirely.
Common Pitfalls to Avoid
- Waiting until the last minute: Transaction errors or delays in processing can cause you to miss the deadline.
- Overlooking forgotten accounts: That old 401(k) from a previous job? It still counts.
- Misunderstanding Roth accounts: Roth IRAs don’t require RMDs during the owner’s lifetime, but Roth 401(k)s did until the rule change in 2024.
- Taking too much or too little: Both mistakes can cause headaches. Stick to the IRS calculation tables.
How Financial Professionals Can Help
Managing multiple retirement accounts and navigating IRS rules can be overwhelming. This is where certified professionals come in handy:
- Certified Financial Planners (CFPs) can design an RMD strategy that fits your overall financial goals.
- Certified Public Accountants (CPAs) can help minimize tax exposure.
- Retirement advisors can coordinate account transfers and optimize timing.
Top firms like Fidelity, Vanguard, and Charles Schwab provide online calculators and dedicated RMD services. Use this Vanguard RMD Calculator to get started.
USA $200 Prepaid Debit Cards for Social Security Retirement in 2025 – How to claim it? Check Process
$5,000 Fines Imposed on Thousands for These Tax Filing Errors: Check How to Avoid Them!
Up to $5,108 Social Security Payment For 70-Year-Olds Eligible on April 3, 2025: Check Eligibility Criteria!
FAQs About Social Security Alerts
Q1: Do I need to take RMDs from all retirement accounts?
Yes. However, while you can combine RMDs from multiple IRAs and take the total from one, each 401(k) must be handled individually.
Q2: What happens if I miss the April 1 deadline?
You could face a 25% penalty, though that can be reduced to 10% if you act quickly and file Form 5329.
Q3: Are RMDs required from Roth accounts?
No for Roth IRAs (during your lifetime). But Roth 401(k)s required RMDs until 2023. Starting in 2024, they no longer do, thanks to the SECURE 2.0 Act.
Q4: Can I donate my RMD to charity?
Yes, through a Qualified Charitable Distribution (QCD). You can donate up to $100,000 per year directly to a qualified nonprofit, and it will count toward your RMD without adding to your taxable income.
Q5: What if I’m still working?
If you’re still employed and contributing to a 401(k) with your current employer, you may be able to delay RMDs from that account until you retire. This rule doesn’t apply to IRAs.
