The government let you save tax-free for decades. At 73 the bill comes due, whether you need the money or not.‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ 
BOOMERS TRADE
Andrew James reporting. 64, and counting.
The IRS has a birthday present for you
The government let you save tax-free for decades. At 73, the bill arrives on a schedule you did not set, whether you need the money or not.
73
The age at which the IRS requires you to start withdrawing from your retirement account. Miss the deadline and the penalty is 25 percent of what you owe.
Required minimum distributions are exactly what the name says. A required minimum distribution, or RMD, is the smallest amount you must pull from a traditional IRA or 401(k) each year. It starts the year you turn 73. The IRS publishes a table. You divide your balance by the number next to your age. The result is your bill.
At 73, the divisor is 26.5. A $500,000 account produces an RMD of about $18,900. At 75 the floor rises to 4 percent. At 85 it crosses 6 percent. At 95 it hits 11 percent.
The curve is convex. Every year you get older, the government takes a bigger slice.
And every dollar of the withdrawal is taxed as ordinary income. The tax code does not treat it gently.
$18,900
First-year RMD on a $500,000 traditional IRA at age 73. Taxed as ordinary income.
 
25%
Penalty on any amount you fail to withdraw by the deadline. The IRS reduced it from 50% under SECURE 2.0.
Take the money and pay the tax, or keep the money and pay the penalty. The table does not negotiate.
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The first boomers turned 73 in 2025. The front of the cohort is taking its first RMDs right now.
Behind them, 11,400 Americans turn 65 every single day, all of them eight years from the same table. The forced withdrawals will accelerate for the next two decades.
Congress did soften one edge. The SECURE 2.0 Act raised the start age from 72 to 73 and dropped the penalty from 50 to 25 percent. It also eliminated RMDs on Roth 401(k) accounts while the owner is alive.
For the vast majority of boomer retirement money, sitting in traditional IRAs and pre-tax 401(k)s, nothing changed. The clock starts at 73 and the tax bill follows.
Where the forced withdrawal sits on the spending schedule.
 
Travel
The trip stage. Mostly spent.
 
Health & Housing
The cohort is here this quarter
The RMD often pays for this aisle. The withdrawal covers the doctor, the retrofit, the room. It was never optional money.
 
Longevity
Next in front of the money
More good years cost money. The RMD provides it, and the IRS takes its share on the way out.
 
Estate
The handoff. Every dollar the RMD pulls out is a dollar that does not compound for the heir. The forced withdrawal shrinks the estate one birthday at a time.
Who is already standing there
The financial adviser and the tax preparer. The brokerage platform that processes millions of forced transactions on a government-published schedule. The adviser who manages the withdrawal timing, the bracket math, and the Medicare premium impact collects a fee on the same calendar the IRS uses. The customers arrive on birthdays, and the table tells you exactly how many.
The catch is the cascade. The RMD is not a line item. It is income that moves your whole tax picture. A large enough withdrawal can push you into a higher bracket and trigger the Medicare income surcharge. It can also increase the tax on your Social Security.
One distribution, three bills. The arithmetic is yours to manage, and nobody at the IRS is going to manage it for you.
The arithmetic
RMD age (73 for those born 1951 to 1959; 75 for those born 1960+) from the SECURE 2.0 Act, signed December 2022. The Uniform Lifetime Table divisor (26.5 at age 73) and implied withdrawal percentages (3.77% at 73, 4.07% at 75, 6.25% at 85, 11.24% at 95) from IRS Publication 590-B (2025), Table III, with percentages derived by Q3 Advisors. The $18,900 first-year RMD on a $500,000 account is Boomers Trade’s own calculation using the 26.5 divisor. The 25% penalty (reduced from 50%) and the 10% correction provision from SECURE 2.0, Section 302. Roth 401(k)/403(b) RMD exemption from SECURE 2.0, Section 325. The 11,400 daily 65th-birthday figure from the Alliance for Lifetime Income, Peak 65 data. The Medicare income surcharge (IRMAA) and Social Security taxation thresholds from IRS and CMS published 2026 schedules.
 
I am nine years from the table. The number next to my age will tell me what the government wants back for letting me keep it this long. Same time tomorrow, watching the clock.
Andrew
Boomers Trade is written by someone getting older right alongside you, and watching who profits from it.

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