1. What is Required Minimum Distribution (RMD)?

RMD is the minimum amount you must withdraw annually from your retirement accounts (like 401(k)s and IRAs) starting at age 72 (or 73 if you reach age 72 after Dec 31, 2022). The IRS requires these withdrawals to ensure tax-deferred accounts eventually pay taxes.

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
• IRS Life Expectancy Factor — From IRS Uniform Lifetime Table based on your age

Explanation: The formula divides your account balance by an IRS-published life expectancy factor 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Details: Calculating RMD accurately is crucial to avoid IRS penalties (25% of the amount not withdrawn). Proper RMD planning helps with tax efficiency in retirement.

4. Using the Calculator

Tips: Enter your retirement account balance in dollars and the appropriate IRS life expectancy factor. All values must be positive numbers.

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 do I find my life expectancy factor?
A: Use IRS Publication 590-B, Uniform Lifetime Table. Your factor changes each year as you age.

Q3: 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A: The IRS imposes a 25% penalty on the amount not withdrawn (reduced from 50% under SECURE 2.0 Act).

Q4: Can I withdraw more than my RMD?
A: Yes, you can always withdraw more than the minimum, but the excess doesn't count toward future RMDs.

Q5: Do Roth IRAs have RMDs?
A: Roth IRAs don't require RMDs during the owner's lifetime (changed in 2010), but inherited Roth IRAs do.