How Do I Calculate My Required Minimum Distribution?
This guide details the specific financial data and IRS guidelines needed to accurately determine your annual required withdrawal from a retirement account.
A Required Minimum Distribution, or RMD, is a mandatory withdrawal you must take from certain retirement accounts after reaching a specific age. The federal government requires these distributions so it can collect taxes on the money that has been growing tax-deferred for years. This article provides a guide to understanding and calculating your RMD.
Determining if a 2025 RMD is Required
Whether you need to take an RMD in 2025 depends on your age and retirement account types. The SECURE 2.0 Act raised the age for beginning RMDs to 73. This means individuals born in 1952 must take their first RMD for the 2025 tax year.
Your first RMD can be delayed until April 1 of the year after you turn 73, which is April 1, 2026, for those turning 73 in 2025. Delaying your first RMD means you will have to take two distributions in 2026—one for 2025 and one for 2026—which could result in a higher tax liability. All subsequent RMDs must be taken by December 31 each year.
The RMD rules apply to tax-deferred accounts like Traditional IRAs, SEP IRAs, SIMPLE IRAs, 401(k)s, 403(b)s, and 457(b) plans. Original owners are not required to take RMDs from Roth IRAs or Roth 401(k)s during their lifetime. A “still-working” exception may also apply if you are over 73 and still participating in your current employer’s retirement plan, provided you do not own more than 5% of the company. This exception only allows you to delay RMDs from that specific employer’s plan and does not apply to IRAs or plans from previous employers.
Information Needed for the RMD Calculation
To calculate your RMD, you must gather three pieces of information.
Prior Year-End Account Balance
The first item is the fair market value of your retirement account as of December 31 of the preceding year. For a 2025 RMD, you must use the account balance from December 31, 2024. This value is reported by your financial institution and can be found on your year-end statement or Form 5498.
Your Age
The second piece of information is your age as of your birthday in the distribution year. For a 2025 RMD, you will use the age you are turning in 2025.
The Correct IRS Life Expectancy Table
The final item is your life expectancy factor, found in one of three IRS tables. Most account owners will use the Uniform Lifetime Table. This table is for unmarried owners, married owners whose spouse is not more than 10 years younger, and married owners whose spouse is not the sole beneficiary.
The Joint Life and Last Survivor Expectancy Table is used when your sole beneficiary is your spouse and they are more than 10 years younger than you. The third table, the Single Life Expectancy Table, is used by beneficiaries of inherited accounts. These tables are available in IRS Publication 590-B, where you can find the factor that corresponds to your age.
The RMD Calculation Formula
The formula requires you to divide your prior year-end account balance by the life expectancy factor from the appropriate IRS table. The formula is: RMD = Prior Year-End Account Balance / Life Expectancy Factor.
For example, if your IRA was valued at $500,000 on December 31, 2024, and you turn 75 in 2025, you would find your life expectancy factor. The Uniform Lifetime Table shows a factor of 24.6 for a 75-year-old. The calculation is $500,000 / 24.6, which equals an RMD of $20,325.20 for 2025. You are always permitted to withdraw more than this amount.
Special Rules for Multiple and Inherited Accounts
The RMD calculation can be more complex if you have multiple retirement accounts or are the beneficiary of an inherited account, as the rules for withdrawals and timelines differ.
Multiple Accounts
If you own multiple Traditional, SEP, or SIMPLE IRAs, you must calculate the RMD for each account separately. However, you can add the individual RMD amounts together and withdraw the total sum from any one or a combination of your IRAs.
This aggregation rule does not apply to employer-sponsored plans like 401(k)s or 403(b)s. The RMD for each of these plans must be calculated and withdrawn from that specific plan.
Inherited Accounts
The rules for beneficiaries of inherited retirement accounts were changed by the SECURE Act and depend on the beneficiary’s classification and when the original owner died. For accounts inherited from someone who died after December 31, 2019, most non-spouse beneficiaries are subject to a 10-year rule. This rule requires the entire account balance to be distributed by the end of the 10th year after the owner’s death.
Whether annual distributions are required during the 10-year window depends on if the original owner had started taking their own RMDs. If the owner died before their RMDs began, the beneficiary is not required to take annual distributions. However, if the owner died on or after that date, the beneficiary must take annual distributions for years one through nine before withdrawing the remaining balance in year 10.
A category called “Eligible Designated Beneficiaries” (EDBs) has different options. EDBs include:
- The surviving spouse
- The owner’s minor children
- Disabled or chronically ill individuals
- Beneficiaries not more than 10 years younger than the deceased owner
A surviving spouse can treat the inherited IRA as their own or take distributions over their own life expectancy using the Single Life Expectancy Table. Other EDBs can also take distributions over their life expectancy.