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RMD Calculation Formula:
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Required Minimum Distributions (RMDs) are the minimum amounts you must withdraw from your retirement accounts each year starting at age 73 (for those who reach age 72 after December 31, 2022). The RMD rules apply to traditional IRAs, SEP IRAs, SIMPLE IRAs, and most employer-sponsored retirement plans.
The calculator uses the standard RMD formula:
Where:
Explanation: The IRS provides life expectancy tables to determine your distribution period factor based on your age. For 2025, you would use the factor corresponding to your age on December 31, 2025.
Details: Calculating your RMD correctly is crucial to avoid the 25% penalty on amounts not withdrawn as required. RMDs ensure you don't indefinitely defer paying taxes on your retirement savings.
Tips: Enter your total retirement account balance as of December 31, 2024, and your distribution period factor from the IRS Uniform Lifetime Table. All values must be positive numbers.
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 (for those born 1951 or later). Subsequent RMDs must be taken by December 31 each year.
Q2: Where can I find the distribution period factors?
A: The IRS publishes Uniform Lifetime Tables in Publication 590-B. Your factor is based on your age on December 31 of the distribution year.
Q3: What happens if I don't take my RMD?
A: The IRS imposes a 25% penalty on the amount not withdrawn as required (reduced from 50% under SECURE 2.0 Act).
Q4: 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 years' RMDs.
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 be.