Required Minimum Distributions: Accounts, Timing and Calculation

Understand which retirement accounts can require annual distributions, when the first deadline applies and how prior-year balance and IRS life-expectancy factors are used. The examples below are explanatory, not product quotes or promises of approval, savings, coverage or investment performance.

A withdrawal rule, not a spending rule

A required minimum distribution is the minimum amount federal tax rules require an account owner to withdraw for a year. The money does not have to be spent; after distribution and any tax withholding, it can be saved or invested in a taxable account if appropriate.

Under current rules, the applicable starting age is generally 73 for people who reach age 72 after 2022 and age 73 before 2033. Later cohorts can have a different applicable age. Traditional, SEP and SIMPLE IRAs generally require distributions even if the owner is working.

Some workplace plans can allow a non-5% owner to delay distributions until retirement. Each employer plan usually must satisfy its own RMD, while multiple traditional IRAs can generally be calculated separately and the total withdrawn from one or more IRAs.

Prepare the calculation before year-end

Custodians may estimate the amount, but the account owner remains responsible for the correct distribution.

1. List covered accounts. Separate traditional IRAs, inherited accounts, workplace plans and Roth accounts because the rules differ.
2. Find prior-year balances. Use the December 31 value for each relevant account.
3. Select the correct table. The IRS Uniform Lifetime, Joint and Last Survivor or Single Life table may apply depending on the facts.
4. Calculate each amount. Divide the balance by the applicable life-expectancy factor and account for any special adjustment.
5. Schedule distribution and withholding. Allow processing time and plan for federal and state tax consequences.

Simplified RMD calculation

Assume a prior December 31 traditional IRA balance of $265,000 and an applicable IRS factor of 26.5. The factor is illustrative for this example; verify the correct table and year.

Inherited accounts, annuities, multiple employer plans and qualified charitable distributions need additional analysis. Do not apply this simplified example to them.

Avoid deadline and aggregation errors

Review the plan early enough to correct a rejected or incomplete transaction.

• First year: Would delaying the first RMD create two taxable distributions in the following year?
• Aggregation: Which IRAs can be combined, and which employer plans must distribute separately?
• Roth status: Is the account a Roth IRA, designated Roth account or inherited Roth account?
• Charitable planning: Does a qualified charitable distribution fit and meet current rules?
• Proof: Keep year-end balances, calculations, distribution confirmations and tax forms.

RMD rules are technical and have changed in recent years. Verify current IRS guidance and consult a tax professional for inherited accounts, missed distributions or unusual plan terms.

Use the guide for a documented decision

Before acting on Required Minimum Distributions: Accounts, Timing and Calculation, write down the facts that apply to your household: the current balance or coverage, the relevant deadline, the exact contract or account terms and the amount your budget can support. Then compare those facts with the official sources below and the latest documents from the institution, insurer, employer or government agency involved.

• Save the dated statement, disclosure, policy or plan document used in the comparison.
• Separate confirmed terms from estimates, marketing language and assumptions.
• Record the question that remains unresolved and who can answer it.
• Recheck the numbers after a rate, balance, income, law or household change.

Frequently asked questions