Core Points - The government mandates that individuals must start taking required minimum distributions (RMDs) from tax-deferred retirement accounts at age 73, with exceptions for current employer accounts if still employed [1] Group 1 - Failing to take RMDs incurs a 25% penalty on the amount that should have been withdrawn, which is often more costly than simply taking the RMD and paying taxes [2] - RMD funds can be utilized in various ways, including covering living expenses, building an emergency fund, and reinvesting in a taxable brokerage account [2][8] Group 2 - RMDs can be used to cover everyday living expenses, and if not needed immediately, they can be saved for future use [4] - Establishing an emergency fund with RMDs is advisable, ideally containing three to six months of living expenses, kept in a high-yield savings account for easy access [5][6] - RMDs can be reinvested in a taxable brokerage account, allowing for potential long-term capital gains tax benefits if held for over a year [7][9]