IRA Minimum Distribution Calculator
Use our free IRA RMDs calculator to estimate how much you’re required to take in Required Minimum Distributions.
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Knowing your Required Minimum Distributions (RMDs) for the year is essential to avoiding major excise taxes on your hard-earned retirement savings. Use our calculator to learn exactly how much your RMDs are this year to avoid these hefty fees.
Why Required Minimum Distributions Matter
If you have a tax-deferred retirement account like a Traditional IRA or Individual 401(k), RMDs are extremely important. Certain retirement accounts allow your savings to grow tax-deferred, which means you won’t have to pay taxes on them until you make withdrawals. These withdrawals (also known as distributions) are taxed at ordinary income tax rates and may be subject to both federal and state taxes.
The IRS institutes Required Minimum Distributions at the age of 73 (or 72 if you turned 72 on or before Dec. 31, 2022) to ensure that seniors with tax-deferred accounts eventually pay taxes on their investments. Once you reach the age for RMDs, you are required to make minimum withdrawals each year so that you can pay taxes on those funds.
RMDs matter because the penalty for not distributing your IRA funds on time can be steep. If you fail to withdraw funds on time, you could incur an excise tax of up to 25%.1 You may be able to reduce this to 10% if you withdraw the funds within two years of the due date, but this still means that you’ll have to pay 10% on top of your ordinary income tax rate. In short, knowing how much you need to withdraw from your retirement account each year is very important, as it could greatly impact your ability to make the most of your savings.
Did You Know? Prior to 2022, seniors who failed to make required minimum withdrawals on time had to pay up to 50% in excise taxes. The SECURE 2.0 Act dropped this rate to 25%, with the possibility to pay just 10% in certain cases.1
How to Use Our IRA RMDs Calculator
Our free IRA RMD calculator is specifically designed for individuals who are already 73 years or older. You can use this calculator to figure out how much you need to withdraw this year to meet the RMDs for your age. To get your results, you’ll only need to input a few pieces of information:
- Your date of birth
- Your beneficiary’s date of birth
- Beneficiary relationship (spouse or other)
- Account balance at the end of last year
The first three pieces of information are easy to answer, but make sure that your account balance is correct so that the results reflect your actual RMD for this year. The IRS calculates RMDs based on your retirement account’s balance as of December 31 of the previous year. If you’re calculating your RMD for 2024, check what your retirement account balance was on Dec. 31, 2023.
Pro Tip: Need help navigating your finances in retirement? Check out our senior finance guide!
Spousal information only plays a role in the calculations if your primary beneficiary is your spouse and they are at least 10 years younger than you. In this situation, the calculation would be based on joint life expectancy, as opposed to uniform life expectancy (which is used in most cases).
The results will show you the minimum amount you need to take out to meet IRS requirements and the remaining balance you’ll have in your account. This is a great way to avoid unnecessary taxes without taking more than you want or need from your retirement savings. Just remember that this calculator is only for seniors who are already 73 years of age or older. If you’re not 73 yet and you want to estimate your future RMDs, check out our Required Minimum Distributions Calculator.
FAQs About Required Minimum Distributions
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What is the RMD formula for 2023?
If you want to do the math on your own, you can simply divide your retirement account balance at the end of last year by your anticipated life expectancy. You can find the life expectancy tables used by the IRS right here. However, if you want to avoid the hassle and ensure that you get the numbers right, simply use our Minimum Distribution Calculator!
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At what age does RMD stop?
The short answer is that it doesn’t. For seniors born in 1950 or later, RMD begins at the age of 73 and continues until the retirement account balance is exhausted or the account holder passes away. If there are still funds left in the account when it is passed on to a beneficiary, the beneficiary generally has 10 years to empty the account without penalty.
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Do RMDs reduce Social Security?
RMDs are treated as taxable income, which means they could impact your Social Security benefit. Having a higher taxable income generally means that you will have lower Social Security benefits and higher Medicare premiums.
Internal Revenue Service. (2023). Retirement Plan and IRA Required Minimum Distributions FAQs.
