April 1 Is the Deadline for Some Homeowners To Tap Into Funds for Their Mortgages Without Penalty 

Homeowners nearing or in the midst of retirement are mostly enjoying the fruits of their labor—namely the house they spent their careers paying off. 

But if you’re still saddled with a mortgage after you retire, you might be looking for ways to help pay off your loan. 

Well, some homeowners should be aware of an April 1 deadline that will allow them to dip into some well-earned funds and prevent them from paying a hefty 25% penalty. 

It’s time to take your first mandatory retirement plan withdrawal

If you turned 73 in 2025, the deadline for your first mandatory retirement plan withdrawal is April 1, 2026.

Your first required minimum distribution, or RMD, refers to taking a withdrawal from any of your pre-tax individual retirement accounts and workplace plans, like 401(k) plans.

The yearly deadline for RMD is Dec. 31, but retirees have until April 1 the year after turning 73 for the first withdrawal only.

Most retirees must start taking their RMD by age 73— though some accounts, like Roth IRAs, aren’t subject to the rule. 

To calculate your RMD, consider the funds in each account by dividing the prior Dec. 31 balance by a “life expectancy factor,” according to the IRS. You can also use a required minimum distribution calculator to see how much money you should be taking out of the account each year. 

For example, if you have $300,000 saved in your retirement account and you’ve just turned 73, then you’re required to take a minimum distribution of $11,320. However, this is a basic equation, which does not take into account other factors, such as martial status or beneficiary age

Beware the 25% penalty 

While most financial professionals would advise that you start taking distributions from your retirement account ahead of the RMD deadline, there is also a penalty if you don’t take funds out of your account.

According to certified financial planner Scott Bishop, partner and managing director of Presidio Wealth Partners, based in Houston, there’s a 25% penalty for skipping the RMD or not withdrawing enough.

However, as he explained to CNBC, there are scenarios in which you can have the penalty reduced. 

“If you miss [the RMD], own up to it,” Bishop said. “Make sure you’re timely with it.”  

He explained that the IRS could reduce the fee to 10% if you correct the mistake, withdraw the proper amount within two years, and file Form 5329. 

In some cases, the IRS could waive the penalty entirely if you show the shortfall happened due to “reasonable error” and you’re taking “reasonable steps” to fix it, according to the agency.

Most homeowners are retirees these days

About 80% of Americans aged 60 or over are homeowners, according to a 2024 report from the United States Census Bureau. 

Additionally, nearly 76% of Americans, aged 55 to 64, are homeowners. This means that the next generation to retire will have to think about how they’ll distribute their saved funds.  

Unfortunately, the hard truth is that more younger people are dipping into their retirement savings to afford their mortgages. In 2025, 6% of people with 401(k)s accounts took "hardship withdrawals"—up from 4.8% in 2024, according to Vanguard Group.

Given how important it is to have funds after retirement, most financial professionals disagree with this strategy.

"A 401(k) is intended to fund your retirement, and withdrawing money prematurely can lead to significant penalties and lost retirement savings," says Steven Sarrel, CPA and partner at Raines & Fischer LLP.

"As a CPA, I recommend finding other ways to manage your mortgage before considering tapping into your 401(k). Use this as a last resort."