RMD (Required Minimum Distribution) calculation

Required Minimum Distributions (RMDs) are mandatory annual withdrawals from tax-deferred retirement accounts (Traditional IRAs, 401(k)s, 403(b)s, etc.) once you reach a certain age. The purpose is to ensure that tax-deferred savings are eventually taxed as income.

32 steps across 8 sections

1. Determine Your RMD Starting Age

  • Born 1951-1959 RMDs begin at age 73
  • Born 1960 or later RMDs begin at age 75
  • First RMD can be delayed until April 1 of the year following the year you turn the applicable age
  • WARNING: Delaying the first RMD means taking two RMDs in one year (the delayed first + the current year's), potentially pushing you into a higher tax bracket

2. Identify All Accounts Subject to RMDs

  • Traditional IRAs (including Rollover IRAs)
  • SEP-IRAs and SIMPLE IRAs
  • 401(k), 403(b), and 457(b) plans
  • Inherited IRAs (different rules apply)
  • Exempt from RMDs Roth IRAs (during owner's lifetime), Roth 401(k)s (SECURE 2.0 change), and current employer 401(k) if still working (if plan allows)

3. Gather December 31 Prior-Year Balances

  • Use the account balance as of December 31 of the prior year
  • Example: For your 2026 RMD, use the December 31, 2025 balance
  • Include all relevant accounts across all custodians
  • Do not include Roth IRA balances

4. Look Up Your Life Expectancy Factor

  • Use the IRS Uniform Lifetime Table (most account owners)
  • Use the Joint and Last Survivor Table if your sole beneficiary is a spouse who is more than 10 years younger
  • Find your age as of December 31 of the distribution year
  • The table provides a divisor (distribution period)

5. Calculate the RMD for Each Account

  • Formula RMD = December 31 Prior-Year Balance / Distribution Period Factor
  • Example (age 75): $2,000,000 / 24.6 = $81,301
  • Example (age 73): $1,000,000 / 26.5 = $37,736
  • Calculate separately for each account type

6. Understand Aggregation Rules

  • IRAs Calculate RMD for each IRA separately, but you can withdraw the total from one or more IRAs in any combination
  • 401(k)/403(b) RMDs must be taken separately from each employer plan (cannot aggregate across plans)
  • 403(b) Can aggregate across multiple 403(b) accounts (similar to IRAs)
  • Inherited accounts Calculate and take separately; cannot aggregate with your own accounts

7. Take the Distribution by the Deadline

  • Annual deadline December 31 of each year
  • First-year exception April 1 of the year following the year you reach RMD age (but second RMD still due by December 31 of that same year)
  • Set up automatic distributions with your custodian to avoid missing deadlines
  • Verify the full RMD amount was distributed by checking year-end statements

8. Report on Your Tax Return

  • Distributions are reported on Form 1099-R from each custodian
  • Include RMD amounts as ordinary income on Form 1040
  • If you are 70.5+, consider Qualified Charitable Distributions (QCDs) of up to $105,000 directly to charity — this satisfies the RMD without increasing taxable income

Common Mistakes

  • Missing the deadline
  • Delaying the first RMD without planning
  • Not aggregating IRA RMDs correctly
  • Trying to aggregate 401(k) RMDs
  • Forgetting about old employer plans

Pro Tips

  • Set up automatic RMDs with your custodian — they calculate and distribute on ...
  • Take your RMD early in the year to avoid December rush and potential processi...
  • Use QCDs if you donate to charity — this satisfies your RMD without increasin...
  • Consider Roth conversions before RMD age to reduce future RMD amounts
  • If your RMD exceeds what you need, reinvest it in a taxable brokerage account

Sources

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