• Since 2023, most retirees must start taking required minimum distributions, or RMDs, from pre-tax retirement accounts at age 73.
• The first deadline is April 1 after turning age 73, and Dec. 31 for future withdrawals.
• But you need to consider the tax consequences when timing your first RMD, according to financial experts.

After decades of building your nest egg, you will eventually have to start taking required minimum distributions, or RMDs, from pretax retirement accounts. The first RMD can be tricky, according to financial experts.

Since 2023, most retirees must begin RMDs at age 73. The first deadline is April 1 of the year after you turn 73, and Dec. 31 for future withdrawals. This applies to tax-deferred individual retirement accounts, most 401(k) and 403(b) plans.

"You want to be tactical and savvy when you take the [first] distribution," said certified financial planner Jim Guarino, managing director at Baker Newman Noyes in Woburn, Massachusetts. He is also a certified public accountant. 

Pre-tax retirement withdrawals incur regular income taxes. By comparison, you'll pay long-term capital gains taxes of 0%, 15% or 20% on profitable assets owed for more than one year in a brokerage account.  

Two required withdrawals in one year

If you wait until April 1 after turning 73 to take your first RMD, you'll still owe the second one by Dec. 31. That means you'll take two RMDs in the same year, which can significantly boost your adjusted gross income.

That can trigger unexpected tax consequences, according to CFP Abrin Berkemeyer, a senior financial advisor with Goodman Financial in Houston.

For example, boosting AGI can lead to income-related monthly adjustment amounts, or IRMAA, for Medicare Part B and Part D premiums. For 2024, IRMAA kicks in once modified adjusted gross income, or MAGI, exceeds $103,000 for single filers or $206,000 for married couples filing together.

"That's the biggest one that catches retirees off guard," Berkemeyer said.

With a higher AGI, lower-earning retirees could also incur higher Social Security taxes or increase their long-term capital gains bracket from 0% to 15%, he said.

When to defer your first distribution

If you're age 73 and just retired in 2024, it could make sense to delay your first RMD until April 1, because 2025 could be a lower-income year, experts say. 

However, your RMD is calculated using your pre-tax retirement balance as of Dec. 31 from the prior year, meaning 2025 RMDs are based on year-end 2024 balances. The calculation divides your previous year-end pretax balance by an IRS life expectancy factor.

That could mean a larger-than-expected RMD for 2025 "if your [2024] portfolio went through the roof," Guarino warned. 

"You really have to run the numbers" to see if it makes sense to incur more income in 2024 or 2025, based on account balances and tax projections, he said.