RMD Calculator

Required Minimum Distributions (RMDs) are mandatory withdrawals that the IRS requires from most retirement accounts starting at a certain age. Understanding RMD rules is essential for retirement planning — missing an RMD triggers one of the most severe tax penalties in the US tax code. This guide explains the SECURE 2.0 Act changes, the calculation formula, which accounts are affected, and strategies for managing RMDs efficiently.

What Is a Required Minimum Distribution?

When you contribute to a traditional IRA, 401(k), or similar pre-tax retirement account, the government allows you to defer taxes until withdrawal. However, Congress imposed a rule: you cannot defer taxes indefinitely. Beginning at a certain age, you must withdraw a minimum amount each year — paying income tax on those withdrawals — even if you do not need the money. This is the Required Minimum Distribution (RMD).

SECURE Act 2.0 – RMD Age Changes

The SECURE Act 2.0 (signed December 2022, effective 2023) significantly changed RMD starting ages:

First RMD: You must take your first RMD by April 1 of the year after you reach your RMD age. If you turn 73 in 2024, your first RMD is due by April 1, 2025 — but your second RMD is still due December 31, 2025. Taking two RMDs in one year increases taxable income, so many people take their first RMD in the year they reach their RMD age rather than delaying.

The RMD Calculation Formula

The RMD formula is:

RMD = Account Balance (December 31 of prior year) ÷ IRS Life Expectancy Factor

The life expectancy factor comes from the IRS Uniform Lifetime Table (Table III). Example factors:

Example: $500,000 IRA balance at age 73. RMD = $500,000 ÷ 26.5 = $18,868. This must be withdrawn and included in taxable income by December 31 of that year.

Which Accounts Require RMDs?

The following retirement accounts require RMDs:

• Traditional IRA
• SEP-IRA
• SIMPLE IRA
• 401(k) plans
• 403(b) plans
• 457(b) plans (government)
• Other defined contribution plans

Exception — Roth IRA: Roth IRAs have NO RMDs during the original owner's lifetime. This is one of the most valuable features of the Roth IRA for estate and retirement planning. (Note: Roth 401(k)s DID require RMDs until SECURE 2.0 eliminated this requirement effective 2024.)

Still-working exception: If you are still working and do not own more than 5% of the company, you may delay RMDs from your current employer's 401(k) until you retire — even if you are over 73. This exception does not apply to IRAs.

Aggregation Rules for Multiple IRAs

If you have multiple traditional IRAs, you must calculate the RMD for each account separately — but you can take the total RMD from any one or combination of your IRAs. For example, if you have three IRAs with separate RMDs of $4,000, $3,000, and $2,000 ($9,000 total), you can withdraw all $9,000 from just one IRA if you wish.

401(k) RMDs work differently — each employer plan's RMD must be taken from that specific account (you cannot aggregate across 401(k) plans or across IRAs and 401(k)s).

Beneficiary RMDs – The 10-Year Rule

Under the SECURE Act (2020) and SECURE 2.0, most non-spouse beneficiaries who inherit an IRA must now empty the entire account within 10 years of the original owner's death. There is no requirement to take annual withdrawals during those 10 years — you could take nothing for 9 years and withdraw everything in year 10 (though large withdrawals spike taxable income). Exceptions to the 10-year rule apply to "eligible designated beneficiaries": surviving spouses, minor children (until they reach majority), disabled individuals, chronically ill individuals, and beneficiaries no more than 10 years younger than the deceased.

Qualified Charitable Distributions (QCDs)

A QCD allows IRA owners aged 70½ or older to transfer up to $105,000 per year (2024 limit, indexed to inflation) directly from an IRA to a qualified charity. The key benefits:

• The QCD amount counts toward your RMD for the year
• The amount is excluded from your taxable income (not just deducted)
• Even people who take the standard deduction benefit (unlike a regular charitable deduction)

QCDs can be a highly effective strategy for charitably-inclined retirees who would otherwise have their RMDs push them into higher tax brackets or trigger Medicare IRMAA surcharges.

RMD Penalty for Missing a Distribution

The penalty for failing to take a required distribution is significant. Under SECURE 2.0 (effective 2023):

• Penalty reduced from 50% to 25% of the shortfall
• Further reduced to 10% if corrected within the "correction window" (generally by the end of the second year after the RMD was due)

To request a waiver, file Form 5329 with the IRS and attach a letter of explanation.

UK Pension Drawdown Equivalent

The UK does not have a direct equivalent to RMDs. Since the 2015 Pension Freedoms, UK defined contribution pension holders can keep their money invested indefinitely without mandatory withdrawals — a significant advantage over US retirement accounts. However, pension funds inherited after death become part of the estate (at the deceased's marginal tax rate if death occurs after 75) under rules proposed in the Autumn 2024 Budget, with changes planned from April 2027.