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The RMD Age May Have Changed—But That Doesn’t Mean You Can Afford to Wait Forever

Missy E
November 14, 2025

Key Takeaways

The Required Minimum Distribution (RMD) age has shifted to 73 in 2025, but delaying planning can still result in serious tax penalties.
Public sector retirees must coordinate FERS, TSP, and other retirement assets to avoid inefficient withdrawals and tax pitfalls.

Why the RMD Rules Matter More in 2025

In 2025, you face new RMD expectations due to the recent legislative shift that raised the beginning age to 73. While this gives you additional time to defer taxes, it does not mean you can ignore or indefinitely delay required distributions

from your retirement accounts. In fact, for many public sector retirees, waiting too long to act can create oversized distributions, bump you into higher tax brackets, and even impact Medicare premiums.

As someone retiring under the Federal Employees Retirement System (FERS), with a Thrift Savings Plan (TSP), and likely some Social Security benefits, your income picture may look stable. But it’s the RMDs—often from your TSP and any IRAs—that can suddenly disrupt that stability if you don’t plan carefully.

Understanding the RMD Age Changes

Congress previously passed the SECURE Act in 2019, which raised the RMD age from 70½ to 72. Then came the SECURE Act 2.0 in late 2022, pushing it further to 73 starting in 2023 for individuals born between 1951 and 1959. If you were born in 1960 or later, your RMD age is 75. But for most government employees nearing or just entering retirement in 2025, age 73 is the key milestone.

You must take your first RMD by April 1 of the year after you turn 73. Every RMD after that must be taken by December 31 of each year. If you wait until April 1 to take your first RMD, you’ll still be required to take another one by the end of that same year—effectively doubling your taxable income that year.

This makes proactive planning around your 73rd birthday critical.

Which Accounts Are Subject to RMDs?

RMDs apply to most tax-deferred retirement accounts. If you’re a public sector retiree, here’s what you need to pay attention to:

Thrift Savings Plan (TSP) – Traditional TSP accounts are subject to RMDs.
Traditional IRAs – These always require RMDs.
403(b) and 457(b) plans – If you worked in public education or local government, you may also have one of these.
FERS Annuity – Your monthly annuity is already taxed as income and does not require RMDs, but it affects your total income profile.
Roth IRAs – Not subject to RMDs while you’re alive, which is why Roth conversions are often considered.
Roth TSP – As of 2025, RMDs no longer apply to Roth TSP balances. This recent change aligns Roth TSP with Roth IRAs in this regard.

The 50% Penalty Is Now 25%—But That’s Still Costly

Historically, missing an RMD triggered a 50% excise tax on the amount not withdrawn. As of 2025, the penalty is now 25%—and can drop to 10% if corrected in a timely manner. While that may seem like relief, consider this:

A missed $30,000 RMD could still result in a $7,500 penalty.
If not corrected quickly, you’ll lose money unnecessarily.

Even with lower penalties, missing an RMD can devastate your income plan. You can’t afford to ignore these rules, especially if you’re managing multiple accounts.

Coordination Is More Important Than Ever

You likely have income from multiple sources—TSP, FERS, Social Security, and possibly IRAs or even part-time work. These streams must be aligned properly so that your RMDs don’t unexpectedly push your income too high.

Here are some areas where coordination is essential:

Social Security Taxation – If your income exceeds certain thresholds, up to 85% of your Social Security benefits may be taxable.
Medicare IRMAA – Higher incomes result in surcharges on Medicare Part B and D premiums.
Tax Bracket Bumps – Two RMDs in one year (such as when you delay the first to April 1) can push you into a higher tax bracket.

By planning RMD withdrawals across multiple years—rather than just reacting when you hit 73—you gain control over your tax exposure.

Strategies to Minimize the Tax Impact

You still have several tools to limit the impact of RMDs, especially if you’re in your late 60s or early 70s:

1. Roth Conversions Before RMD Age

Before RMDs begin, you can convert portions of your traditional TSP or IRA into a Roth account. This creates tax-free income later and reduces future RMD amounts. The earlier you start converting, the better—because once RMDs start, you can’t convert them.

2. Qualified Charitable Distributions (QCDs)

If you’re at least 70½, you can donate up to $100,000 directly from your IRA to a qualified charity. That distribution counts toward your RMD but doesn’t increase your taxable income.

3. Withdrawals Before 73

If you’re retired but under age 73, strategic withdrawals from TSP or IRAs can reduce your account balances, lowering the base used to calculate RMDs later.

4. Use RMDs for Fixed Expenses

Don’t view RMDs as a burden. If you use the income to cover fixed retirement costs—like insurance premiums or property taxes—you’re aligning taxable income with real needs.

Special Rules for Government Employees Still Working

One overlooked provision allows you to delay RMDs from your TSP if you’re still working beyond age 73 and don’t own more than 5% of the organization (in this case, the federal government). This exception applies only to your current employer’s retirement plan—so if you’ve rolled your TSP into an IRA or have other old accounts, you’re still responsible for those RMDs.

If you retire mid-year in 2025 at age 73, you will still need to take an RMD for the year—unless you qualify for this exemption.

RMD Calculations: How Much Will You Have to Take?

Your RMD amount is based on your account balance at the end of the previous year, divided by a life expectancy factor provided by the IRS. For example:

If your TSP balance on December 31, 2024 was $500,000
And your IRS factor for age 73 is 26.5
Then your 2025 RMD = $500,000 ÷ 26.5 ≈ $18,868

As you age, the IRS factor gets smaller, meaning RMDs grow over time—even if your account balance remains stable.

Don’t Let the TSP RMD Catch You Off Guard

Many retirees focus heavily on their FERS annuity and Social Security—and overlook the large role that the TSP plays in their future tax burden. Since traditional TSP is fully taxable when distributed, failing to plan its withdrawals before RMD age can cause sudden tax spikes.

You also can’t satisfy your RMD for TSP by taking money from an IRA, or vice versa. Each account type has its own separate RMD requirement.

Timing Is Everything—Start Preparing Early

The most effective RMD plans begin 5–10 years before you actually turn 73. That gives you time to:

Assess how large your future RMDs might be
Consider Roth conversions while in a lower tax bracket
Take advantage of partial withdrawals that won’t trigger excess taxes

In 2025, a typical public sector retiree aged 65–70 still has time to improve their future tax positioning. But waiting even a few years can shrink your options dramatically.

Avoiding Surprises in Your Later Years

In your mid-70s and beyond, you may face:

Larger RMDs due to compound growth
Limited flexibility due to health issues
Reduced cognitive bandwidth to handle financial complexity

By planning early, you remove guesswork from your 70s and 80s. This also ensures surviving spouses or heirs won’t be forced to make last-minute decisions under pressure.

It’s Not Just About You—RMDs and Beneficiaries

The SECURE Act also affected inherited retirement accounts. Non-spouse beneficiaries now have to fully distribute inherited accounts within 10 years—removing the old lifetime “stretch” IRA strategy. That means your children could face a massive tax bill if you leave behind a large TSP or IRA balance.

Minimizing your own RMDs can reduce what they inherit, helping to limit their future tax burden. It’s another reason to begin planning now.

Proactive Planning Creates a Smoother Retirement

RMDs don’t have to feel like a trap. If you treat them as part of a broader income and tax strategy, you can use them to support your goals—rather than scramble to meet IRS deadlines.

You’ve spent decades building a stable retirement through your public service. Don’t let shifting rules and deadlines throw your plans off course. The earlier you get organized, the more flexibility you preserve for yourself and your family.

If you need personalized support, get in touch with a licensed agent listed on this website for guidance tailored to your income, accounts, and retirement timeline.