1. What is Required Minimum Distribution?

Required Minimum Distributions (RMDs) are the minimum amounts that retirement plan account owners must withdraw annually starting with the year they reach 72 years of age (or 70½ if born before July 1, 1949). The IRS provides life expectancy tables to calculate these distributions.

2. How RMD Calculation Works

The RMD is calculated using this formula:

Where:

• Year-End Balance — The account balance as of December 31 of the previous year
• Life Expectancy Factor — From IRS Uniform Lifetime Table based on your age

Explanation: The IRS provides different life expectancy tables for different situations (Uniform Lifetime Table, Joint and Last Survivor Table, and Single Life Table).

3. Importance of RMD Calculations

Details: Failing to take RMDs results in a 50% excise tax on the amount not distributed. Proper calculation ensures compliance with IRS regulations while minimizing unnecessary withdrawals.

4. Using the Calculator

Tips: Enter your account balance as of December 31 of the previous year and your current age (must be 70 or older). The calculator uses the IRS Uniform Lifetime Table to determine your distribution period.

5. Frequently Asked Questions (FAQ)

Q1: When must I take my first RMD?
A: Your first RMD must be taken by April 1 of the year following the year you turn 72 (70½ if born before July 1, 1949). Subsequent RMDs must be taken by December 31 each year.

Q2: What accounts require RMDs?
A: Traditional IRAs, SEP IRAs, SIMPLE IRAs, 401(k), 403(b), 457(b), and other defined contribution plans.

Q3: Can I withdraw more than the RMD?
A: Yes, you can always withdraw more than the required minimum, but not less.

Q4: What if I'm still working at 72?
A: If you're still working and don't own more than 5% of the company, you may delay RMDs from your current employer's plan until retirement.

Q5: Are RMDs taxable?
A: Yes, RMDs from tax-deferred accounts are generally taxable as ordinary income in the year withdrawn.