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How to calculate your required minimum distribution

Withdraw this annual amount from your tax-advantaged retirement accounts to avoid a tax penalty.


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Calculating the required minimum distribution (RMD) from your retirement funds can seem complicated. But we’ve broken down the calculations for you so that you can easily calculate yours and avoid any tax penalties.

How to calculate your RMD

Calculate your RMD in four steps:

  1. Using the IRS Uniform Lifetime Table below, locate the distribution period by your age.
  2. Determine your IRA or other retirement account balance as of December 31 of the year before.
  3. Divide your account balance by your distribution period.
  4. Repeat this calculation for each account that requires an RMD.

IRS Uniform Lifetime Table

AgeDistribution period in years

Exceptions to calculations

The base calculation for your RMD is the following:

Account balance Distribution period = RMD

What RMD rules apply if I inherited an IRA?

Prior to the passage of the 2019 Setting Every Community Up for Retirement Enhancement (SECURE) Act, you could stretch out inherited IRA distributions over your lifetime. But the new rules require non-spouse inheritors to take distributions that drain the account within 10 years of the account holder’s death. Basically, you now have 10 years to pay the taxes on any inherited tax-advantaged retirement accounts.

What is the required minimum distribution?

RMD is the minimum amount you’re required to withdraw from tax-advantaged retirement accounts each year until you pass away or the retirement fund is depleted. The RMD applied to everyone starting at age 70 and a half years old, but the SECURE Act increased the age to 72, for anyone who doesn’t turn 70 and a half until January 1, 2020 or after.

Does my plan require an RMD?

Most tax-advantaged retirement plans require an RMD, but there are a few nuances, depending on when you retire and how much of your employer’s company you own.

Retirement accountRequires RMD?Age
Traditional IRAYes70 and a half or 72
SEP IRAYes70 and a half or 72
Simple IRAYes70 and a half or 72
401(k)Yes70 and a half or 72 or the first year after retirement, whichever is later
403(b)Yes70 and a half or 72
457(b)Yes70 and a half or 72
Profit-sharing planYes70 and a half or 72
Employer contribution plan, and you own 5% or more of the companyYes70 and a half or 72, regardless of when you retire
Roth IRANo
Roth 401(k)Yes70 and a half or 72

What’s the RMD deadline?

You must take your first annual RMD by April 1 of the year after you qualify. For example, if you turn 72 on December 15, 2020, you must take your RMD for the year by April 1, 2021. Every year after, you must take your entire RMD by December 31.

If you don’t take any distributions, or if the distributions don’t meet your calculated requirement, you’ll be subject to an excise tax on the amount not distributed.

What happens if I miss my RMD?

If you don’t take a distribution for the year or take less than the RMD amount, you’re taxed 50% of the undistributed RMD. For example, if you’re required to take out $2,000 for the year, but you only take out $1,000, you’re subject to a 50% tax on the remaining $1,000.

RMD changes due to the coronavirus relief bill

Under the Coronavirus Aid, Relief and Economic Security (CARES) Act, you’ll no longer get taxed on 50% of your undistributed RMD if you fail to collect on time. This is only for RMDs you were supposed to collect in 2020.

Read our guide to the CARES Act and other changes that affect your retirement accounts.

How do I take my RMD?

After your first year, you can choose to withdraw your RMD as one large payment, or set up smaller month-to-month automatic payments. You can receive your RMD payment in one of the following ways:

  • Check. Get a check in the mail.
  • ACH Transfer. Get your funds transferred directly into your bank account.
  • Automatically reinvest. Roll the funds into a pre-taxed investment account.

You can also elect to have your taxes withheld from the withdrawals before they’re sent to you. If you choose not to, make sure that the RMD tax amount won’t result in an IRS underpayment penalty.

How can I avoid or reduce my RMD?

You can’t avoid or reduce the amount of your RMD. But if you don’t need the money for your retirement living expenses, there are ways to reduce the taxes you pay on your withdrawals.

Bottom line

As long as you don’t turn 70 and a half until 2020, the SECURE Act lets you put off starting your RMDs until age 72. But it’s still a good idea to understand what kind of distribution you’re required to take and plan what to do with the money. To get a better idea of what you can do with your accounts and what your options are, compare retirement savings accounts to find out what will work best for your retirement.

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