Required Minimum Distribution (RMD) Calculator
Estimate your Required Minimum Distribution (RMD) from your tax-deferred retirement accounts like a Traditional IRA or 401(k).
Understanding the RMD Calculator
The U.S. government requires individuals to withdraw a minimum amount from their tax-deferred retirement accounts each year after reaching a certain age (currently 73). This is known as a Required Minimum Distribution (RMD). The rule ensures that the IRS can eventually collect taxes on these tax-advantaged savings. This calculator helps you estimate your annual RMD amount.
How It Works
The RMD calculation is straightforward and mandated by the IRS.
- Retirement Account Balance: You must use the fair market value of your account as of December 31st of the previous year.
- Your Age: Your age at the end of the current year determines your "distribution period" or "life expectancy factor."
The Formula
The calculation is as follows:
RMD = Account Balance / Distribution Period
The "Distribution Period" is a factor provided by the IRS in their Uniform Lifetime Table. This calculator has the current table built-in. For example, the factor for a 75-year-old is 24.6. This means a 75-year-old with a $500,000 IRA balance would have an RMD of $500,000 / 24.6 = $20,325.20 for the year. This withdrawal is typically taxed as ordinary income.
Frequently Asked Questions
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