Turning 73 Forces a Withdrawal From This Stock Whether the Owner Wants the Cash or Not
Most investors celebrate a stock that turns every dollar into eleven, but holding a massive winner inside a traditional IRA sets up a collision between the IRS and your retirement timeline that gets worse the more the shares are worth.
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If you own Apple (NASDAQ:AAPL | AAPL Price Prediction) inside a traditional IRA or 401(k), the IRS starts writing your withdrawal schedule the year you turn 73. It does not matter if you want the cash, if you love the stock, or if you plan to hold every share until you die. A required minimum distribution, or RMD, forces money out of that account, and the bill is calculated off the full account value on Dec. 31 of the prior year.
Here is the part almost nobody thinks about until it hits: The more your stock has appreciated, the worse the tax hit gets. A winning position inside a traditional IRA is a bigger problem than a losing one, which is the exact opposite of what most savers assume.
Why a 10-Bagger Inside an IRA Becomes a Tax Bomb
Apple is the cleanest example. Over the last ten years, AAPL has posted a price return of 1160.37% (Fuse market data, retrieved Sept. 16). That is a price return, not a total return. If you bought a modest slug of shares a decade ago inside a traditional IRA, that position is now a very large number, and the IRS uses that large number, not your cost basis, to compute your RMD.
The 27-cent quarterly dividend Apple currently pays will not come close to covering the required withdrawal on a heavily appreciated position. The dividend yield sits around 0.32%. Your RMD percentage at 73 is materially higher than that, so you will be selling shares or transferring them in-kind, and either way the fair market value is taxed as ordinary income the year of the distribution.
What the Law Actually Says
The rule lives in Internal Revenue Code §401(a)(9), with the withdrawal factors published in IRS Publication 590-B under the Uniform Lifetime Table. The SECURE 2.0 Act of 2022 pushed the starting age from 72 to 73 effective 2023, and it is scheduled to rise again to 75 in 2033. Your first RMD is due by April 1 of the year after you turn 73. Every RMD after that is due by December 31.
Which Accounts Get Hit, and Which Do Not
RMDs apply to traditional IRAs, SEP and SIMPLE IRAs, 401(k)s, 403(b)s, and 457(b)s. They do not apply to Roth IRAs during the owner’s lifetime, and under SECURE 2.0, Roth 401(k) RMDs were eliminated starting in 2024. That single distinction is why placement matters as much as picks: the same Apple shares in a Roth throw off zero forced withdrawals for life.
How to Handle the Distribution Without Blowing Up Your Tax Return
- Pull your Dece. 31, 2025, account balance and multiply it by the Uniform Lifetime factor for your age from Publication 590-B. That is your dollar figure.
- If you do not want to sell, ask your custodian to move shares in-kind to a taxable brokerage account for an amount equal to the RMD. The fair market value transferred still counts as ordinary income, but you keep the position intact.
- If you are charitably inclined and at least 70½, route up to $108,000 in 2026 directly from the IRA to a qualified charity as a Qualified Charitable Distribution. It satisfies the RMD and keeps the amount out of your adjusted gross income.
- Take the distribution before Dec. 31. Report it on your 1040. If you missed one, file Form 5329.
Miss the Deadline, Meet the 25% Penalty
Skip an RMD and the IRS charges an excise tax of 25% of the shortfall under SECURE 2.0, down from the old 50%. Fix it inside the correction window and that drops to 10%. Either way it is a penalty on money you were forced to take out in the first place.
The action item is placement. High-growth names like Apple, which now carries a $4.86 trillion market cap and a trailing PE of 38, compound harder inside a Roth, where the IRS never comes knocking. A big pre-tax balance eventually becomes a big taxable withdrawal, and the fix starts years before the first RMD lands (we walked through how to defuse that first-year tax bomb in a free guide here). If you have room to convert, or a decision to make about where a future winner should live, make it before the birthday does the choosing for you.
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Joel South covers large-cap stocks, dividend investing, and major market trends, with a focus on earnings analysis, valuation, and turning complex data into actionable insights for investors.
He brings more than 15 years of experience as an investor and financial journalist, including 12 years at The Motley Fool, where he served as an investment analyst, Bureau Chief, and later led the Fool.com investing news desk. He has also co-hosted an investing podcast and appeared across TV and radio discussing market trends.
