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) once you reach the age of 72 (or 73 if you reach age 72 after Dec 31, 2022). The IRS provides life expectancy tables to determine your 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
• Life Expectancy Factor — From IRS Uniform Lifetime Table based on your age

Explanation: The formula divides your account balance by a distribution period from IRS life expectancy tables to determine your minimum required withdrawal.

3. Importance of RMD Calculation

Details: Calculating RMD accurately is crucial to avoid IRS penalties (25% of the amount not withdrawn). RMDs ensure retirement accounts are eventually taxed after years of tax-deferred growth.

4. Using the Calculator

Tips: Enter your account balance in dollars and your life expectancy factor (from IRS tables). For 2024, make sure to use the updated IRS life expectancy tables.

5. Frequently Asked Questions (FAQ)

Q1: When must I take my first RMD?
A: By April 1 of the year after you turn 72 (or 73 if born after 1950). Subsequent RMDs are due by December 31 each year.

Q2: Where can I find the life expectancy factors?
A: IRS Publication 590-B provides the Uniform Lifetime Table with distribution periods based on age.

Q3: Are RMDs required for Roth IRAs?
A: No, Roth IRAs don't require RMDs during the owner's lifetime, but inherited Roth IRAs may have RMD requirements.

Q4: What happens if I don't take my RMD?
A: The IRS imposes a 25% penalty on the amount not withdrawn (reduced from 50% under SECURE 2.0 Act).

Q5: Can I withdraw more than my RMD?
A: Yes, you can always withdraw more than the required minimum, but the excess doesn't count toward future RMDs.