Required Minimum Distribution (RMD) Calculator

Understanding Required Minimum Distributions (RMDs)

A Required Minimum Distribution (RMD) is the minimum amount you’re required to withdraw each year from certain tax-deferred retirement accounts, as determined by the IRS. The amount is based on your age and the balance of your account. These withdrawals are taxable, and while you’re only obligated to take the minimum amount, you’re free to withdraw more if needed.

Key RMD Deadlines to Know

Your first RMD must be taken by April 1st of the year after you turn 73. This age was updated under the SECURE Act 2.0 in 2022 (previously 72), and it’s set to rise to 75 in 2033. Before 2019, the RMD age was 70½.

While RMDs are technically due by December 31 each year, the IRS allows a one-time delay for your first withdrawal. If you delay, you’ll still need to take two RMDs in that year—which may result in a higher tax bill if it bumps you into a higher tax bracket.

Example

If you turn 73 in 2025, you can take your first RMD that year or delay until April 1, 2026. However, you still must take your second RMD by December 31, 2026, and continue annually by year-end going forward.

Ways to Delay RMDs

You can delay your first RMD until April 1 of the year following your 73rd birthday. Another option is if you’re still working and your retirement plan is through your employer. As long as you own less than 5% of the company, you can defer RMDs from that specific account until you officially retire.

Note: This doesn’t apply to other accounts like IRAs. RMDs from those must begin once you reach the required age, regardless of employment status.

How RMDs Are Calculated?

To calculate your RMD:

1. Find your retirement account balance as of December 31 of the previous year.

2. Use the IRS life expectancy tables to determine your distribution period.

3. Divide your account balance by this number to get your RMD amount.

Which Table Do You Use?

• Uniform Lifetime Table: For most individuals, including those with a spouse less than 10 years younger.

• Joint Life and Last Survivor Table: For those whose spouse is more than 10 years younger and is the sole beneficiary.

For an easier process, our RMD Calculator can handle the math. Simply input your details and let the tool calculate everything for you.

Which Retirement Accounts Require RMDs?

RMDs apply to many tax-advantaged retirement plans, such as:

• Traditional IRAs

• SEP IRAs

• SIMPLE IRAs

• Rollover IRAs

• 401(k) plans

• 403(b) and 457(b) plans

• Profit-sharing plans

• Qualified annuities

• Small business retirement plans

Exception: Roth IRAs

Roth IRAs do not require RMDs during the account holder’s lifetime, since contributions are made with after-tax dollars. However, RMDs may apply to inherited Roth IRAs.

Do You Need to Calculate RMDs for Every Account?

Yes. Each account needs an individual RMD calculation. That said, you may aggregate RMDs from the same type of account:

• Traditional IRAs: Calculate separately but withdraw the total from one or more IRAs.

• 401(k)s: Must calculate and withdraw from each account separately.

• 403(b)s: Calculate separately, but withdrawals can be aggregated across accounts.

Inherited accounts from different individuals cannot be combined, though those from the same person can be.

Important: Withdrawals from Roth IRAs never count toward your RMD, and taking more than your required amount doesn’t reduce future RMDs.

What If You Miss an RMD?

If you fail to take the full RMD, the IRS may impose a 25% excise tax on the amount not withdrawn. However, this penalty can drop to 10% if corrected within two years.

You can withdraw your RMD any time during the calendar year, as long as it’s completed by December 31. That allows flexibility to take monthly or lump-sum payments.

How RMDs Affect Your Taxes?

RMDs are treated as ordinary income by both federal and most state tax authorities. They’re added to your total taxable income for the year, which could potentially increase your tax bracket if combined with other income sources.

Roth accounts generally aren’t taxed upon withdrawal since contributions were made with after-tax dollars.

RMD Reporting Rules for Brokerages

Brokerage firms, custodians, and plan administrators are required by the IRS to offer RMD calculations to account holders. However, you are ultimately responsible for accurate calculations and timely withdrawals.

If your financial institution makes an error, you may still face penalties unless you can prove a reasonable cause. To avoid mistakes, it’s wise to calculate RMDs yourself or double-check with a financial advisor.

RMD Rules for Inherited Accounts

If you inherit a retirement account, RMD rules vary based on your relationship to the original owner and the type of account.

Non-Spouse Inheritance: The 10-Year Rule

Under the SECURE Act (2019), non-spouse beneficiaries must withdraw the entire account balance within 10 years of the original owner’s death.

Exceptions to the 10-Year Rule

• Surviving spouses

• Minor children

• Individuals who are chronically ill or disabled

• Beneficiaries less than 10 years younger than the original account holder

These individuals may qualify for extended or delayed RMD schedules.

Inheriting IRAs as a Spouse

Spouses can choose to roll the IRA into their own or create an Inherited IRA. Depending on age, they may delay RMDs:

• If the deceased was over 72, RMDs can be delayed until December 31 of the following year.

• If under 72, RMDs start when the deceased would have turned 72.

Inheriting Roth IRAs

For Spouses

You can assume the Roth IRA as your own and continue to benefit from its RMD-free status.

For Non-Spouses

Non-spouse beneficiaries must follow the 10-year rule and withdraw all funds within a decade, even though the withdrawals are generally tax-free.

Inherited 401(k) Plans

401(k) inheritance rules vary and can be complex. Spouses are typically the default beneficiaries unless waived. Options may include:

• Leaving the funds in the plan

• Rolling them into an Inherited IRA

• Withdrawing within five years, depending on plan rules

Since 401(k) policies differ and state laws may apply, consulting a financial advisor is highly recommended.

Strategies to Minimize RMD Taxes

• Use Roth accounts: Roth IRAs and Roth 401(k)s are funded with after-tax dollars. While Roth 401(k)s do require RMDs, rolling them into a Roth IRA can eliminate this.

• Qualified Charitable Distributions (QCDs): Donate your RMD directly to a qualified charity. QCDs satisfy your RMD and lower your taxable income.