Overview
- Vanguard analyzed traditional IRA clients and found 6.7% of those subject to required minimum distributions failed to take them in 2024.
- The average RMD was $11,600, exposing individuals who miss to estimated penalties of $1,160 at 10% or $2,900 at 25%.
- Scaling its findings to 8.7 million IRA holders, Vanguard estimates about 585,000 people miss RMDs annually, yielding $678 million to $1.7 billion in potential penalties.
- RMDs generally begin at age 73, with first-year takers who turned 73 this year allowed until April 1, 2026, while those 74 or older must withdraw by December 31, 2025.
- Investopedia highlights the risk of steep tax penalties for missing the deadline, and Vanguard’s Andy Reed says even modest reductions in misses could save retirees hundreds of millions each year.