Use SmartAsset’s RMD calculator to see what your required minimum distributions look like now and in the future. Enter your retirement account balance at the end of the previous year, your age at the end of this year and the expected rate of return on the account to calculate your RMDs.
Do you have questions about planning or managing your retirement income? Speak with a financial advisor today.
The Basics of Required Minimum Distributions (RMDs)
Once you reach a certain age, the IRS requires you to withdraw a minimum amount each year from most pre-tax retirement accounts. These withdrawals are known as required minimum distributions, or RMDs, and their purpose is to ensure the government can receive tax payments on this money instead of it continuing to sit in your account.
Your first RMD must be taken by April 1 of the year after you turn either 73 or 75. Here’s how to know which applies to you:
- If you were born between 1951 and 1959, your RMD age is 73
- If you were born in 1960 or later, your RMD age is 75
For those who turned 72 before Dec. 31, 2022, your RMDs likely began at age 72. In 2023, the SECURE Act 2.0 increased the RMD age to 73 and set the stage for it to rise to 75 in 2033.
Our RMD calculator is designed to help individuals estimate how much to withdraw from their pre-tax retirement accounts when they reach RMD age. Calculators like this one can be useful in the retirement planning process. Plus, it can help you avoid potential penalties for not withdrawing the required amount.
Why RMDs Can’t Be Ignored
RMDs play a pivotal role in planning out a steady stream of income during retirement, and there are real penalties for not adhering to the rules. Most importantly, those who don’t take RMDs in time will be subject to up to a 50% excise tax on the amount they didn’t withdraw. The SECURE 2.0 Act offers chances to drop that to 25% or 10%, though, if the RMD mishap is corrected by taking extra within two years. The IRS may waive the penalty under certain circumstances, though.
Additionally, RMDs can have significant tax implications due to the pre-tax nature of the accounts those funds typically reside in. When you withdraw assets from traditional IRAs or 401(k)s, you must pay income tax on them, with the exception of after-tax accounts like Roth IRAs. Therefore, by accurately calculating RMDs, retirees can plan their income tax liabilities and avoid potential financial hurdles that come with skipping that step.
When Do I Have to Take RMDs?
As you can see, your birth year will ultimately dictate when you must begin taking RMDs—age 73 or 75. However, here’s a closer look at the specific deadlines that apply and rule exceptions that exist.
RMD Deadlines
Generally, you have until Dec. 31 each year to take your RMD. However, for the first RMD, you have until April 1 of the year following the year you hit your required RMD age. Keep in mind, though, that delaying the first RMD means you’ll be taking two distributions in one year, potentially pushing you into a higher tax bracket for that tax year.
RMD Exceptions
Some exceptions to the RMD rules do exist to create some flexibility if you’re still working past the required age. If you’re still working and don’t own 5% or more of the business you work for, most retirement plans will allow you to delay RMDs until you actually retire.
This delay can yield significant tax advantages, such as reducing your overall taxable income, for those deciding to work later in life. However, 401(k)s from previous employers may not allow you to do this. Furthermore, Roth accounts aren’t subject to RMD rules.
How to Calculate RMDs
An RMD calculation requires inputs such as your age, account balance and marital status, as well as using the IRS Uniform Lifetime Table to estimate your annual RMD. This straightforward method considers various factors influencing this amount.
However, factors like your age, your retirement account balance and your spouse’s age can significantly impact your RMD. Therefore, consulting with a financial advisor to ensure accurate calculations is advisable if it’s not clear to you where you stand.
RMD Tables
The IRS provides RMD tables showcasing life expectancy factors used to calculate RMDs. You must find the distribution period number that corresponds to your age and use that in the calculation. Here is what the Uniform Lifetime Table looks like:
IRS Uniform Lifetime Table
| Age | Distribution Period in Years |
| 72 | 27.4 |
| 73 | 26.5 |
| 74 | 25.5 |
| 75 | 24.6 |
| 76 | 23.7 |
| 77 | 22.9 |
| 78 | 22.0 |
| 79 | 21.1 |
| 80 | 20.2 |
| 81 | 19.4 |
| 82 | 18.5 |
| 83 | 17.7 |
| 84 | 16.8 |
| 85 | 16.0 |
| 86 | 15.2 |
| 87 | 14.4 |
| 88 | 13.7 |
| 89 | 12.9 |
| 90 | 12.2 |
| 91 | 11.5 |
| 92 | 10.8 |
| 93 | 10.1 |
| 94 | 9.5 |
| 95 | 8.9 |
| 96 | 8.4 |
| 97 | 7.8 |
| 98 | 7.3 |
| 99 | 6.8 |
| 100 | 6.4 |
| 101 | 6.0 |
| 102 | 5.6 |
| 103 | 5.2 |
| 104 | 4.9 |
| 105 | 4.6 |
| 106 | 4.3 |
| 107 | 4.1 |
| 108 | 3.9 |
| 109 | 3.7 |
| 110 | 3.5 |
| 111 | 3.4 |
| 112 | 3.3 |
| 113 | 3.1 |
| 114 | 3.0 |
| 115 | 2.9 |
| 116 | 2.8 |
| 117 | 2.7 |
| 118 | 2.5 |
| 119 | 2.3 |
| 120 and over | 2.0 |
You can use this table to calculate your required minimum distribution amount this year by completing these steps:
- Locate your age on the IRS Uniform Lifetime Table
- Find the “life expectancy factor” that corresponds to your age
- Divide your retirement account balance (as of Dec. 31 of the previous year) by your current life expectancy factor
Since RMDs are recalculated annually, changes in your account balance and life expectancy will affect how much you must withdraw. It’s unlikely that you’ll withdraw the same amount each year.
Types of Retirement Accounts That Require RMDs
Most types of retirement accounts require you to take RMDs. Here’s a quick list of accounts that require RMDs:
The big exception to this rule are Roth IRAs and other Roth accounts, but there are some stipulations to this. Roth IRAs are not subject to RMDs in any way. However, for 2022 and 2023, Roth 401(k)s and Roth 403(b)s were subject to RMDs. This is no longer the case, though.
Roth IRAs are only subject to RMDs when inherited by a beneficiary. In this case, the IRS does require that you take RMDs from the account.
FAQs for Calculating RMDs
RMD calculations can raise several complex issues. Here are answers to some of the most frequently asked questions in order to help you digest some of the more difficult pieces in this scenario.
Are Roth IRAs Subject to RMDs?
You typically won’t be required to take required minimum distributions out of your Roth IRA. Again, while this rule exists for your lifetime, if you die and pass on your Roth IRA to an heir, they will likely be required to take RMDs. There is an exception to this rule for your spouse, though.
How Is My RMD Calculated?
As discussed above, your RMD is calculated using the fair market value (FMV) of your IRA account as of Dec. 31 of the previous year you’re taking an RMD and your life expectancy. Using the life expectancy distribution period and Uniform Lifetime Table provided by the IRS, you can then determine what your RMD will be for the year.
Can I Reinvest an RMD into a Tax-Advantaged Account?
No, this cannot typically be done. You can’t put these funds back into an IRA or 401(k) to take advantage of specific tax breaks. You can, however, invest the money into a taxable brokerage account after you’ve paid taxes on the distribution. If you don’t need the funds for expenses, you can put them in a high-yield savings account, invest in a 529 plan or donate to a qualified charity.
Who Qualifies as an Eligible Designated Beneficiary?
An eligible designated beneficiary (EDB) is always an individual who inherits a retirement account. These individuals have some flexibility when withdrawing funds from an inherited account. Trusts and other entities don’t qualify as eligible designated beneficiaries. There are five categories of individuals that qualify as EDB and they are:
- Surviving spouse
- Minor children
- Individuals who are no more than 10 years younger than the original account owner
- Disabled individuals
- Chronically-ill individuals
Bottom Line
Understanding and accurately calculating RMDs can significantly affect your financial stability in retirement. Proper management tools, like annually recalculating your RMDs and ensuring adequate withdrawals, work as strategic moves. If managing RMD intricacies seems daunting, a financial advisor’s expertise may prove beneficial, aiding you in your journey toward a secure and comfortable retirement.
Tips for Retirement Planning
- Understanding RMD requirements is just one of many things you’ll want to plan out for your retirement. A financial advisor can help you build a retirement plan. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- You can use SmartAsset’s retirement calculator to help you see how much you’ll need to retire comfortably.
Photo credit: ©iStock.com/Korrawin, ©iStock.com/Witoon Pongsit