Retirees with traditional IRAs or 401(k)s must take their Required Minimum Distributions (RMDs) by December 31, 2025, to avoid a significant IRS penalty of up to 25% of the withdrawn amount. Those turning 73 this year can delay their first RMD until April 1, 2026, though this may result in two distributions in one year, potentially increasing tax liability. While the IRS may waive penalties for valid reasons like illness, forgetting is not an excuse. RMD funds can be used for expenses, reinvested, or used for purchases.