RMD Calculator

What a Required Minimum Distribution is

The IRS lets you defer taxes on money inside traditional retirement accounts for decades. Eventually the government wants its share, so it requires you to take a Required Minimum Distribution, or RMD, each year starting at a specific age. The distribution is taxed as ordinary income.

Who has to take one

RMDs apply to traditional IRAs, SEP IRAs, SIMPLE IRAs, 401(k) plans, 403(b) plans, and most other tax-deferred retirement accounts. Roth IRAs do not require RMDs during the original owner's lifetime. Inherited accounts follow their own rules.

When RMDs start under SECURE 2.0

The SECURE Act 2.0 pushed the RMD start age to 73 for people who turn 72 after 2022. It rises to 75 in 2033. Your first RMD is due by April 1 of the year after you reach the required age, and every RMD after that is due by December 31 of the calendar year.

How the calculation works

The IRS publishes a Uniform Lifetime Table with a life expectancy factor for each age. To get your RMD, divide your prior year-end balance by the factor for your age this year. So a $500,000 IRA at age 75 uses a divisor of 24.6, which produces a roughly $20,325 RMD. The percentage of your balance you must withdraw increases each year as the divisor gets smaller.

The penalty for missing one

SECURE 2.0 reduced the missed-RMD excise tax from 50 percent of the shortfall down to 25 percent, and to 10 percent if you correct it in a timely way. Still steep. Set a calendar reminder, or ask your custodian to automate distributions.

Qualified Charitable Distributions

If you are charitably inclined, a QCD sends money directly from your IRA to a qualified charity. It counts toward your RMD and is excluded from taxable income, which can be more tax efficient than taking the RMD and donating the cash afterward.

Common ways to use RMD money

• Cover current living expenses in retirement.
• Reinvest in a taxable brokerage account for future growth.
• Fund a Roth conversion in a lower income year.
• Donate to charity through a QCD.

RMD rules can shift with new legislation and IRS guidance. Verify your specific situation with a tax professional before acting.