1. What is Required Minimum Distribution (RMD)?

RMD is the minimum amount you must withdraw annually from your retirement accounts (like traditional IRAs and 401(k)s) starting at age 73 (for those who reach 72 after Dec 31, 2022). The RMD for 2025 is calculated by dividing your account balance by the IRS distribution period.

2. How Does the RMD Calculator Work?

The calculator uses the RMD formula:

Where:

• \( Account\ Balance \) — Your retirement account balance as of December 31 of the previous year
• \( Distribution\ Period \) — Life expectancy factor from IRS Uniform Lifetime Table

Explanation: The IRS provides distribution periods based on your age to ensure you withdraw funds over your expected lifetime.

3. Importance of RMD Calculation

Details: Calculating RMD accurately is crucial to avoid IRS penalties (25% of the amount not withdrawn). Proper RMD planning helps with tax efficiency in retirement.

4. Using the Calculator

Tips: Enter your retirement account balance in dollars and the distribution period from IRS tables. The distribution period typically decreases each year as you age.

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 after you turn 73. Subsequent RMDs are due by December 31 each year.

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

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

Q4: What happens if I miss an RMD?
A: The IRS penalty is 25% of the amount not withdrawn (reduced from 50% under SECURE 2.0 Act).

Q5: Are Roth IRAs subject to RMDs?
A: Roth IRAs are not subject to RMDs during the owner's lifetime, but inherited Roth IRAs may have RMD requirements.