Estimate Your RMD Using Our Required Minimum Distribution Calculator (2024)

FAQs

How do I calculate my minimum RMD? ›

Generally, a RMD is calculated for each account by dividing the prior December 31 balance of that IRA or retirement plan account by a life expectancy factor that the IRS publishes in Tables in Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs).

The 4% rule says people should withdraw 4% of their retirement funds in the first year after retiring and take that dollar amount, adjusted for inflation, every year after. The rule seeks to establish a steady and safe income stream that will meet a retiree's current and future financial needs.

Say your IRA was worth $500,000 at the end of 2023, and you were taking your first RMD at age 73 this year. Your distribution amount would be $18,868 ($500,000 divided by 26.5). Likewise, if you were turning 85 in 2024, your RMD would be $31,250 ($500,000 divided by 16).

For simplicity's sake, let's assume a hypothetical investor has one IRA with an account balance of $100,000 as of December 31 of the prior year. To calculate the RMD the year they turn 73, they would use a life expectancy factor of 26.5. So the RMD would be $100,000 ÷ 26.5, or $3,773.58.

How RMDs are calculated. To calculate your required minimum distribution for the current year, you divide your account balance at the end of the last year by your life expectancy. The IRS provides tables that show you which life expectancy numbers to use based on your age and if you are sharing your RMD with a spouse.

For investors who plan to use their RMDs as a source of retirement income, a monthly payment may be a good choice. Keep in mind that while you'll pay the same amount of income tax no matter when you receive the money, delaying your RMD until year-end gives your money more time to grow tax-deferred.

The $1,000 per month rule is designed to help you estimate the amount of savings required to generate a steady monthly income during retirement. According to this rule, for every $240,000 you save, you can withdraw $1,000 per month if you stick to a 5% annual withdrawal rate.

The Setting Every Community Up for Retirement Enhancement Act of 2019 required that certain beneficiaries of a deceased individual retirement account owner or plan participant must draw down their assets within 10 years of receiving those assets—as opposed to their “applicable” life expectancy.

The ideal monthly retirement income for a couple differs for everyone. It depends on your personal preferences, past accomplishments, and retirement plans. Some valuable perspective can be found in the 2022 US Census Bureau's median income for couples 65 and over: $76,490 annually or about $6,374 monthly.

You'll pay a 25% tax penalty on required money that was not withdrawn, or 10% if you correct it within two years. So if you are age 78 and you have an IRA balance of $100,000, your RMD for the year would be $4,545.45 (which is calculated by dividing your balance by distribution period years in the table above).

At what age does RMD stop? ›

At what age do RMDs stop? Simply put, they don't! Once you start taking RMDs, there is no stopping age. You must continue making withdrawals each year, even if you don't need the income.

If your IRA balance at year-end is $1 million and you're 73 years old, your life expectancy factor is 26.5 according to the IRS. Divide your balance by 26.5 ($1,000,000/26.5), and that equals $37,735.85, which is your RMD amount.

How is my RMD calculated? The amount of your RMD is usually determined by the fair market value (FMV) of your IRA as of December 31 of the previous year, factored by your age and your life expectancy using the uniform life expectancy method. Sometimes FMV and RMD calculations need to be adjusted after December 31.

If you don't need to use your RMD from your IRA for living expenses, then you can reinvest them in a Roth IRA. The fund you use to contribute to a Roth IRA can come from any available source. However, you must be careful and adhere to the contribution limits and earned income requirements when making contributions.

Though the age to begin RMDs was set at 72 through the end of 2022, the SECURE 2.0 Act raised the RMD demarcation age to 73 for those turning 72 in 2023. The RMD age will eventually increase to age 75 for anyone who turns 74 after Dec. 31, 2032.

The required minimum distribution is the minimum amount you must take out of your retirement account after a certain age to avoid a tax penalty. RMDs are determined by dividing the retirement account's prior year-end fair market value by a life expectancy factor published by the IRS.

Generally, a designated beneficiary is required to liquidate the account by the end of the 10th year following the year of death of the IRA owner (this is known as the 10-year rule). An RMD may be required in years 1-9 when the decedent had already begun taking RMDs.