Important: As part of the bipartisan COVID-19 stimulus bill Congress suspended required minimum distributions for 401(k) and IRA plans for 2020.
Retirees who are age 72 or above are required by the IRS to take a minimum distrubtion annually. This calculator helps people figure out their required minimum distribution (RMD) to help them in their retirement planning. We also offer a calculator for 2019 RMD.
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Most retirement plans discourage account holders from withdrawing early. If you have a traditional IRA or 401(k) plan, you can only withdraw money without penalties once you’re 59 1/2 years old. Otherwise, early withdrawal will result in a 10% tax penalty. It’s better to leave your balance untouched so your savings will grow faster.
The IRS helps ensure you don’t take retirement funds while you’re still working. However, once you reach a certain age, you’re enforced to start taking retirement money. This is referred to as required minimum distribution. Our guide will explain what minimum required distribution is and how it works. If you’re aiming for retirement in a couple of years, you should look into how it might affect your taxes. We’ll also discuss how it’s calculated to help you estimate your RMD once you reach the right age.
Required minimum distribution (RMD) is the floor amount you must withdraw from your retirement account each year once you reach the prescribed age. The IRS enforces RMDs on retirement accounts such as traditional IRAs, 401(k) plans, and Roth 401(k) plans. RMDs are primarily imposed on tax-deferred retirement accounts. As such, retirees can take more than the prescribed RMD but not less than the enforced amount per year.
According to the IRS, RMD rules also apply to the following retirement plans:
What About Roth IRAs? Roth IRAs do not enforce RMDs on account holders. This is because Roth IRA contributions are comprised of after-tax dollars. It allows you to withdraw the equal amount of your contributions anytime, provided that the account has been opened for 5 years. But upon death, once your beneficiaries inherit a Roth IRA, they are required to withdraw minimum distributions.
Prior to the Setting Every Community Up for Retirement Enhancement (SECURE) Act, the starting age for RMDs was 70 1/2 years old. But after the SECURE Act was signed into law on December 20, 2019, the age requirement was raised. If you’re born on or after July 1, 1949 and your 70th birthday fell on or after July 1, 2019, you are not obligated to take RMDs until you reach the age of 72. However, if you were born before July 1, 1949, the required age will still be 70 1/2. You must withdraw your RMD by December 31 each year after your required beginning date.
What happens if you don’t withdraw your RMD? If you fail to take your RMD, or don’t take the required amount, you’ll face penalty charges. You must pay 50% of the RMD that was not withdrawn.
Since RMD is only the floor amount, you are allowed to take more. Note that your RMD distributions are considered taxable income during the year you withdraw them. This is the time the IRS starts collecting taxes you were able to defer from your retirement account. And once you fall under a lower tax bracket by the time you retire, it means you’ll pay lower taxes.
RMD rules come with certain exceptions:
RMD was Waived in 2020 RMDs were not required for the year 2020 due to the impact of the COVID-19 pandemic. The waiver is included in the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which was enacted on March 27, 2020. Not imposing RMDs gave retirement accounts more time to recover from market crashes. Owners who could afford not to withdraw from their retirement accounts also benefitted from the tax break on mandatory withdrawals.
Most people who invest in traditional IRA accounts and 401(k) plans, which are tax-deferred investment accounts, do so presuming their tax rates will decrease once they retire. It makes sense to think your taxes will be lower during retirement compared to your working years.
But once people stop working, some retirees may find themselves with the same or even higher tax bracket. This happens when you’ve acquired wealth outside of your tax-deferred retirement plans. And when you factor that wealth with your annual Social Security benefits and RMDs, you can end up paying higher taxes.
Knowing your RMD helps you plan how much money to withdraw on other accounts to manage your taxes. And though IRS personnel may notify you with your RMD amount every January, the IRS holds account owners responsible for getting RMD calculations right. Again, if you fail to withdraw the required distribution, you pay a 50% penalty on the RMD amount you did not take.
Can you reduce your RMD to decrease your taxes? Yes. One strategy is to start withdrawing from your tax-deferred retirement account when you reach 59 1/2 years old. This is the age you can start taking money from your traditional IRA and 401(k) without penalties. Just withdraw enough to reduce the size of your tax-deferred account, but not so much that it will push you into a higher tax bracket.
Withdraw Before Turning 72 Making withdrawals before your reach 72 results in a a smaller balance, which helps lower your RMD. Withdrawing from your retirement account when you turn 59 1/2 can allow you to defer taking Social Security benefits, which is subject to increase by 8% each year until you turn 70.
Another way to reduce your RMD is by donating a portion or all of your RMD to charity. This is called a qualified charitable distribution (QCD), where the funds are not taxable. Likewise, QCDs are not eligible for charitable deduction claims. Married or individual account holders can donate up to $100,000 a year from their IRA. As a rule, the funds must be directly transferred to a 501(c)(3) organization, which is a qualified nonprofit group.
Avoiding RMDs You can avoid RMDs by rolling over your traditional IRA or 401(k) balance into a Roth IRA account. Though you’ll incur a larger tax bill for the year when you do this, the IRS will no longer require you to take RMDs. Once you have a Roth IRA setup, your balance can continue growing tax-free.
However, note that you can only make tax and penalty-free withdrawals after your assets have been in the account for at least 5 years (you have to be 59 1/2 years old if you’re withdrawing account earnings). Thus, it’s ideal to do this several years before you’re required to take RMDs. If you think your taxes will be higher once you retire, rolling over your balance to a Roth IRA can help ease your tax burdens.
If you’re still not sure how to go about your retirement funds and taxes, make sure to consult a certified public accountant or qualified tax advisor. They can provide you with further assistance specific to your financial needs.
RMD withdrawals are based on your retirement account balance and your life expectancy as defined by the IRS. If you have multiple retirement accounts, you can withdraw distribution from each account that will amount to your total RMD for the year. On the other hand, if you have more than one IRA account, the IRS allows you to take your total RMD from just one of your IRA accounts.
To calculate your RMD for the current year, take your retirement account’s balance on December 31 of the previous year. Then, divide it by the distribution period based on your age. Here’s the basic formula below:
RMD = Dec. 31 balance from previous year / assigned distribution period
Distribution periods are classified into different tables. Before proceeding with your calculation, verify which table applies to you by checking the IRS Publication 590-B on their website. Below are period tables you should refer to:
For many account holders, their spouse is usually the primary beneficiary of their retirement account. This uses the IRS Uniform Lifetime table to calculate RMD withdrawals. The table is also used by unmarried account holders, as well as married account holders whose spouses are not the sole beneficiary of their IRA. For instance, if you’re 75 years old and your spouse is 4 years younger than you, your RMD’s distribution period is 22.9. Refer to the table below:
| Age | Distribution Period | Age | Distribution Period |
|---|---|---|---|
| 70 | 27.4 | 93 | 9.6 |
| 71 | 26.5 | 94 | 9.1 |
| 72 | 25.6 | 95 | 8.6 |
| 73 | 24.7 | 96 | 8.1 |
| 74 | 23.8 | 97 | 7.6 |
| 75 | 22.9 | 98 | 7.1 |
| 76 | 22.0 | 99 | 6.7 |
| 77 | 21.2 | 100 | 6.3 |
| 78 | 20.3 | 101 | 5.9 |
| 79 | 19.5 | 102 | 5.5 |
| 80 | 18.7 | 103 | 5.2 |
| 81 | 17.9 | 104 | 4.9 |
| 82 | 17.1 | 105 | 4.5 |
| 83 | 16.3 | 106 | 4.2 |
| 84 | 15.5 | 107 | 3.9 |
| 85 | 14.8 | 108 | 3.7 |
| 86 | 14.1 | 109 | 3.4 |
| 87 | 13.4 | 110 | 3.1 |
| 88 | 12.7 | 111 | 2.9 |
| 89 | 12.0 | 112 | 2.6 |
| 90 | 11.4 | 113 | 2.4 |
| 92 | 10.2 | 114 | 2.1 |
| 91 | 10.8 | 115 and over | 1.9 |
| 92 | 10.2 |
On the other hand, if your spouse is 10 years (or more) younger than you, and is the sole beneficiary of your retirement account, you must use the IRS Joint Life and Last Survivor Expectancy table to calculate RMD withdrawals. Under this table, your life expectancy factor is based on you and your spouse’s age. Unlike the Uniform Lifetime table, this table usually results in lower RMDs.
Below is a section of the Joint Life and Last Survivor Expectancy table for account holders between 70 to 79 years old. The ages on top refers to your age (account holder’s age), while the ages listed vertically on the left represents your spouse’s age (beneficiary’s age). For example, if you’re 73 years old and your spouse is 58 years old, your distribution period is 28.3.
| Your Age | 70 | 71 | 72 | 73 | 74 | 75 | 76 | 77 | 78 | 79 |
|---|---|---|---|---|---|---|---|---|---|---|
| Spouse Age | ||||||||||
| 69 | 22.2 | 21.8 | 21.4 | 21.1 | 20.8 | 20.5 | 20.2 | 19.9 | 19.7 | 19.5 |
| 68 | 22.7 | 22.3 | 22.0 | 21.16 | 21.3 | 21.0 | 21.8 | 20.6 | 20.3 | 20.1 |
| 67 | 23.2 | 22.8 | 22.5 | 22.2 | 21.9 | 21.6 | 21.4 | 21.2 | 21.0 | 20.8 |
| 66 | 23.7 | 23.4 | 23.1 | 22.8 | 22.5 | 22.3 | 22.0 | 21.8 | 21.7 | 21.5 |
| 65 | 24.3 | 23.9 | 23.7 | 23.4 | 23.1 | 22.9 | 22.7 | 22.5 | 22.4 | 22.2 |
| 64 | 24.8 | 24.5 | 24.3 | 24.0 | 23.8 | 23.6 | 23.4 | 23.2 | 23.1 | 22.9 |
| 63 | 25.4 | 25.2 | 24.9 | 24.7 | 24.5 | 24.3 | 24.1 | 23.8 | 23.8 | 23.7 |
| 62 | 26.1 | 25.8 | 25.6 | 25.4 | 25.2 | 25.0 | 24.8 | 24.7 | 24.6 | 24.4 |
| 61 | 26.7 | 26.5 | 26.3 | 26.1 | 25.9 | 25.7 | 25.6 | 25.4 | 25.3 | 25.2 |
| 60 | 27.4 | 27.2 | 27.0 | 26.8 | 26.6 | 26.5 | 26.3 | 26.2 | 26.1 | 26.0 |
| 59 | 28.1 | 27.9 | 27.7 | 27.5 | 27.4 | 27.2 | 27.1 | 27.0 | 26.9 | 26.8 |
| 58 | 28.8 | 28.6 | 28.4 | 28.3 | 28.1 | 28.0 | 27.9 | 27.8 | 27.7 | 27.6 |
| 57 | 29.5 | 29.4 | 29.2 | 29.1 | 28.9 | 28.8 | 28.7 | 28.6 | 28.5 | 28.4 |
| 56 | 30.3 | 30.1 | 30.0 | 29.8 | 29.7 | 29.6 | 29.5 | 29.4 | 29.3 | 29.3 |
| 55 | 31.1 | 30.9 | 30.8 | 30.6 | 30.5 | 30.4 | 30.3 | 30.3 | 30.2 | 30.1 |
To understand how RMD is calculated, let’s take the following example. Suppose you’re turning 73 in October 2021 and you want to know the minimum distribution you can withdraw. By December 31, 2020, your IRA account had a balance of $110,000. For this example, your spouse is only 4 years younger than you. Thus, you must use the Uniform Lifetime table to calculate your RMD. The distribution factor for 73 is 24.7.
RMD = $110,000 / 24.7
RMD = $4,453.44
For 2021, you must withdraw a minimum of $4,453.44 from your IRA account.
Next, given all the factors are the same, what if your spouse is 15 years younger than you? While you turn 73 in 2021, your spouse turns 58 in 2021. This means you must use the Joint Life and Last Survivor Expectancy table to calculate your RMD. Based on the table, your distribution factor is 28.3.
RMD = $110,000 / 28.3
RMD = $3,886.93
In this example, you must withdraw a minimum of $3,886.93 in 2021 from your IRA account.
You can start estimating your RMDs even before you reach 72. Using our calculator on top, you can calculate your RMD for the succeeding years.
Let’s suppose you’re turning 72 on December 1, 2021. Your retirement account has a balance of $100,000, with an estimated return of 4% per year, resulting in a total balance of $104,000. In this example, your spouse is four years younger than you, which means your distribution factor is based on the Uniform Lifetime table.
The following chart shows your projected RMDs and account balance till you turn 100:
| Age | RMD Amount | Account Balance |
|---|---|---|
| 71 | 0 | $104,000 |
| 72 | $4,063 | $104,098 |
| 73 | $4,214 | $104,047 |
| 74 | $4,372 | $103,837 |
| 75 | $4,534 | $103,456 |
| 76 | $4,703 | $102,892 |
| 77 | $4,853 | $102,154 |
| 78 | $5,032 | $101,208 |
| 79 | $5,190 | $100,066 |
| 80 | $5,351 | $98,718 |
| 81 | $5,515 | $97,152 |
| 82 | $5,681 | $95,356 |
| 83 | $5,850 | $93,320 |
| 84 | $6,021 | $91,033 |
| 85 | $6,151 | $88,523 |
| 86 | $6,278 | $85,786 |
| 87 | $6,402 | $82,815 |
| 88 | $6,521 | $79,607 |
| 89 | $6,634 | $76,157 |
| 90 | $6,680 | $72,523 |
| 91 | $6,715 | $68,709 |
| 92 | $6,736 | $64,721 |
| 93 | $6,742 | $60,568 |
| 94 | $6,656 | $56,335 |
| 95 | $6,551 | $52,038 |
| 96 | $6,424 | $47,695 |
| 97 | $6,276 | $43,327 |
| 98 | $6,102 | $38,958 |
| 99 | $5,815 | $34,702 |
| 100 | $5,508 | $30,581 |
Based on the chart, you’ll notice that the RMD amount increases each year. At 72, your minimum withdrawal is $4,063. But once you turn 80, your RMD amount increases to $5,351. In this example, if you reach the age of 93, your RMD will be as high as $6,742. After it reaches that peak, RMD decreases gradually each year. Note that this calculation only applies if you withdraw the minimum distribution each year.
Required minimum distribution (RMD) is the annual floor amount you must take from your tax-deferred retirement account, such as traditional IRAs and 401(k) plans. This is enforced by the IRS once you reach the age of 72, according to the SECURE Act. The distributions count as taxable income during the year you withdraw them, which means it can affect your tax rate once you retire.
Depending on the size of your retirement account, and if you’ve acquired non tax-deferred accounts, your income tax may be higher upon retirement. Thus, it helps to calculate your RMDs in advance to manage your tax burdens. If you have a large balance and you want to reduce your RMD, you can employ several strategies.
Account owners have the option to start withdrawing once they reach 59 1/2 to decrease their RMD. You may also make qualified charitable distributions, which are nontaxable donations to a nonprofit organization. But for those who want to avoid RMDs altogether, there is a way out. You can roll your IRA or 401(k) account into a Roth IRA plan to eliminate RMDs. However, note that you must do this several years in advance before turning 72. You can only withdraw from a Roth IRA account without penalty after 5 years.
To calculate your RMD for the year, check your balance on December 31st of the previous year. Then, divide it by the distribution period based on your age. Distribution periods vary according to your age and the age of your spouse. If your spouse is less than 10 years younger than you, you must refer to the IRS Uniform Lifetime table. If your spouse is 10 years or more younger than you, you must refer to the Joint Life and Last Survivor Expectancy table for your RMD calculation. To estimate your RMD more conveniently, use our calculator on top of this page.
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