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RMD Calculator Description

What Is a Required Minimum Distribution (RMD)?

Required Minimum Distributions (RMDs) are the legally mandated minimum amounts that individuals must withdraw annually from most tax-deferred retirement accounts starting at a certain age. This ensures the IRS eventually collects taxes on the money.

Accounts Subject to RMDs

• Traditional IRAs
• 401(k), 403(b), and 457(b) plans
• SEP IRAs and SIMPLE IRAs
• Inherited IRAs

Roth IRAs are exempt during the original owner's lifetime but are subject to RMD rules when inherited.

When Do RMDs Begin?

• For individuals turning 72 before January 1, 2023, RMDs start at age 72.
• For those turning 72 after that date, the new start age is 73 under the SECURE 2.0 Act.
• RMDs must be taken by December 31 each year, except for the first RMD, which may be delayed until April 1 of the following year.

How to Calculate Your RMD

The IRS provides a life expectancy factor table to help determine the amount to withdraw. The calculation is straightforward:

RMD = Account Balance ÷ Life Expectancy Factor

Step-by-Step:

1. Find your retirement account balance as of December 31 of the previous year.
2. Locate your age’s corresponding factor in the IRS Uniform Lifetime Table.
3. Divide the balance by the factor to get your RMD.

Example:

John is 74 and his account balance on December 31 was $250,000. The IRS life expectancy factor for age 74 is 25.5.

RMD = $250,000 ÷ 25.5 = $9,803.92

Special Considerations & Edge Cases

• Multiple IRAs: RMDs must be calculated individually but can be aggregated and withdrawn from any one or more IRAs.
• 401(k) Plans: RMDs must be withdrawn separately from each employer-sponsored plan.
• Still Working Exception: If still employed and owning less than 5% of the company, you may delay RMDs from your current employer’s 401(k).
• Inherited Accounts: Non-spouse beneficiaries usually must withdraw all funds within 10 years.
• Rollovers: RMDs cannot be rolled over. If you perform a rollover, the RMD must be withdrawn first.

Real-World Case Studies

Case Study 1: Multiple IRAs

Jane, age 75, holds two traditional IRAs with balances of $200,000 and $300,000. Her life expectancy factor is 22.9. She calculates separately but withdraws from just one:

IRA 1 RMD: $200,000 ÷ 22.9 = $8,733.62
IRA 2 RMD: $300,000 ÷ 22.9 = $13,100.87
Total RMD: $21,834.49

Case Study 2: Inherited IRA

Michael inherits a traditional IRA from his uncle in 2024. As a non-spouse beneficiary, he chooses equal annual withdrawals over 10 years to avoid a tax spike, fully liquidating the account by 2034.

Understanding RMDs and planning ahead can reduce penalties, avoid tax surprises, and align distributions with retirement income needs.

Take the next step: Use our free RMD calculator now to safeguard your savings and enjoy a confident retirement.