After decades of diligently saving in tax-deferred retirement accounts like a Traditional IRA or 401(k), the time eventually comes when the IRS requires you to start taking money out. These mandatory withdrawals are called Required Minimum Distributions, or RMDs. The rules are designed to ensure that you—and the government—eventually receive and pay taxes on that tax-deferred growth. Our RMD Calculator helps you estimate the amount you must withdraw each year, making it easier to stay in compliance with IRS rules and avoid steep penalties.
How to Use the RMD Calculator
Calculating your RMD for the year is a simple process:
- Enter Account Balance: Input the total fair market value of your retirement account as of December 31st of the *previous* year.
- Enter Your Date of Birth: Provide your date of birth so the calculator can determine your age and the correct distribution period from the IRS life expectancy tables.
- Calculate Your RMD: Click the "Calculate RMD" button to see the estimated minimum amount you must withdraw from your account for the current year.
Understanding Required Minimum Distributions
RMDs are minimum amounts that you must withdraw annually from most retirement accounts once you reach a certain age. The rule applies to tax-deferred accounts where you haven't yet paid income tax on the contributions or the earnings. The government needs you to start withdrawing the money so that it can finally be taxed as ordinary income.
Which Accounts Have RMDs?
RMD rules apply to the following types of retirement plans:
- Traditional IRAs
- SEP IRAs
- SIMPLE IRAs
- 401(k) plans
- 403(b) plans
- 457(b) plans
- Profit-sharing plans
Notably, Roth IRAs do not have RMDs for the original owner. This is a significant advantage of Roth accounts, as you are never forced to withdraw the money during your lifetime, allowing it to continue growing tax-free for you or your heirs.
When Do I Have to Start Taking RMDs?
The starting age for RMDs has changed in recent years due to the SECURE Act and SECURE 2.0 Act. Currently, you must take your first RMD for the year in which you turn age 73. You have until April 1 of the year *following* the year you turn 73 to take your first RMD. For all subsequent years, the RMD must be taken by December 31.
How Your RMD is Calculated
The RMD calculation is based on a simple formula: your prior year-end account balance divided by a life expectancy factor from an IRS table.
RMD = Account Balance (as of Dec. 31 of prev. year) / Distribution Period
The "Distribution Period" is a number provided by the IRS in their Uniform Lifetime Table. This table lists a life expectancy factor for each age. Our calculator automatically looks up the correct factor for your age to determine your RMD. For example, according to the table, the distribution period for a 75-year-old is 24.6. If that person had $500,000 in their IRA at the end of the previous year, their RMD would be $20,325.20 ($500,000 / 24.6).
The Penalty for Missing an RMD
Failing to take your full RMD by the deadline can result in a significant tax penalty. The penalty was recently reduced by the SECURE 2.0 Act, but it is still substantial. The penalty is 25% of the amount you failed to withdraw. This can be further reduced to 10% if you correct the mistake in a timely manner. It is one of the steepest penalties in the tax code, so it's critical to take your RMDs on time every year.
Frequently Asked Questions About RMDs
What if I have multiple IRAs or 401(k)s?
You must calculate the RMD for each of your Traditional IRA accounts separately. However, you can then add up the total RMD amount for all your IRAs and withdraw that total sum from just one of the IRAs, or from any combination of them. The rule for 401(k) plans is different: you must calculate and take the RMD from each 401(k) plan separately.
Do I have to sell my stocks to take my RMD?
No, not necessarily. You can satisfy your RMD by taking an "in-kind" distribution. This means you can transfer shares of a stock or mutual fund from your retirement account directly to a regular, taxable brokerage account. The fair market value of the shares on the date of the transfer is counted as your RMD and is reported as taxable income, but you don't have to sell the investment itself.
What if I am still working past age 73?
There is an exception to the RMD rules if you are still working. If you are still employed and participating in your current employer's 401(k) plan (and you do not own more than 5% of the company), you can delay taking RMDs from *that specific 401(k) plan* until you retire. However, this "still working" exception does not apply to any Traditional IRAs or 401(k)s you may have from previous employers; you must still take RMDs from those accounts.
Can I reinvest my RMD?
Yes, but you cannot roll it over into another tax-deferred retirement account. Once the RMD has been withdrawn and the taxes have been paid, it is your money to do with as you please. You can spend it, save it, or reinvest it in a regular taxable brokerage account.