Originally published on 11/24/25

The deadline for making your annual required minimum distribution (RMD) from certain retirement accounts is almost here—and for many people age 73 and older, it can lead to stress and confusion. Below, we break down what exactly an RMD is, why the Internal Revenue Service (IRS) requires it and how to withdraw the right amount of money so you can make the most of your retirement savings. 

What to know about the deadline for required minimum distribution​

If you are over the age of 73 and have a traditional IRA, a Simplified Employee Pension (SEP) Individual Retirement Arrangement (IRA) or a Savings Incentive Match Plan for Employees (SIMPLE) IRA account, the IRS makes you withdraw a certain amount of money every year from your account. They call it a Required Minimum Distribution (RMD). This year, the first withdrawal was due by April 1, and the second is due by December 31. 

The IRS determines how much you owe by dividing your IRA balance from December of the previous year by the life expectancy factor, which is determined by the IRS based on a variety of factors, such as marital status and who your sole beneficiary is. You can view the full breakdown here.

Not all retirees are required to make a withdrawal. According to the IRS, “Roth IRA owners are not required to take withdrawals during their lifetime; however, beneficiaries are subject to the RMD rules after the account owner’s death.”

Why the IRS requires retirement withdrawals

The reason for the required withdrawals is so the IRS can make sure individuals using a retirement account are still paying their taxes. 

And if you don’t withdraw the money, the IRS warns you then become “subject to a 25% excise tax on the amount not withdrawn. The 25% excise tax rate is reduced to 10% if the error is corrected within two years.”

How to make a withdrawal

If you still need to make the required withdrawal this year, there are several ways you can do it. First, log into your retirement fund account and initiate a withdrawal. From there, you will select how you wish to receive the money: direct deposit or by a physical check. 

Then, take steps to avoid common mistakes: “RMD mistakes rarely come from neglect. They come from complexity,” Scott Van Den Berg, a certified financial planner and president of advisory firm Century Management in Austin told CNBC. “People don’t realize how many accounts they have, who’s responsible for what or how quickly the rules have changed.”

Tom Geoghegan, a certified financial planner and founder of Beacon Hill Private Wealth in Summit, New Jersey recommends taking the money soon. 

“One of the biggest RMD mistakes is waiting until December to sort everything out,” he told CNBC. “When retirees rush, they are more likely to miscalculate the [RMD] amount, sell the wrong assets or miss the deadline altogether.” 

What happens if you miss a withdrawal 

If you miss the RMD withdrawal window there are a few things you can do. The first is to pay a fine determined by the IRS, which amounts to 25% of your equity withdrawal amount. 

Retirees can also fill out a waiver explaining why they missed withdrawals. If the reason is “reasonable error,” the IRS will waive the fee and allow you to make the withdrawal when you’re able. 

Smart ways to use your RMDs if you don’t need the cash

After you make your required withdrawal and realize that you don’t need the money, there are several things you can do. 

The first is to give the money to a charity you care about—a move called a qualified charitable distribution (QCD). 

“It’s the IRS’s best-kept secret for retirees,” Ashton Lawrence, a Certified Financial Planner at Mariner Wealth Advisors, told CNBC. “Skip the tax bill and help a cause you believe in.”

Another option is to put the money in a 529 college savings plan for someone you care about. Currently, there is no federal tax break available for this option; however, several states across the country do offer one.

You can also use the money to help pay off your debts and loans, ensuring that those things aren’t hanging over your head. 

Link to original: https://www.womansworld.com/life/money/what-to-do-with-ira-required-minimum-distributions-you-dont-need