How to Calculate RMDs (Required Minimum Distributions) for IRAs

It pays to calculate RMDs (Required Minimum Distributions) as you approach retirement or if you are already retired. You'll avoid tax penalties and preserve more of your retirement savings. Besides that, calculating RMDs can help you strategize gifting or spending to reduce estate taxes, especially if your estate nears the 2025 federal exemption of $13.99 million, and can also guide your investment strategy.

So, what are RMDs? RMDs are the minimum annual withdrawals you must make ea

ch year from most tax-deferred retirement plans (excluding Roth accounts). Because your retirement accounts grow tax-free over time, the government taxes withdrawals through Required Minimum Distributions (RMDs), treated as regular income.

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Although you may be required to take RMDs from 401(k), 403(b), or other employer-sponsored retirement plans, we're focusing on how to calculate RMDs from a traditional Individual Retirement Account (IRA).

Starting RMD withdrawals at the right age is critical, but bear in mind that the rules have changed recently.

• In 2020, the SECURE Act increased the age for Required Minimum Distributions (RMDs) from retirement accounts from 70-½ to 72.
• The SECURE 2.0 Act raised the RMD age to 73 for individuals who turn 72 on or after January 1, 2023.
• You must take your first RMD by April 1 of the year following the year you turn 73.
• Starting in 2033, the RMD age will increase to 75 for individuals who turn 74 after December 31, 2032.

Not sure how to calculate your RMD? We’ll walk you through the steps and point you to other practical resources to use. For more detailed information, seek guidance from a qualified financial adviser or tax professional.

Calculate RMDs for a traditional IRA

We recommend using the RMD calculator designed by Fidelity, although you may also search for an RMD calculator on your broker's website. The Fidelity tool allows you to calculate the amount you must withdraw even if you are not yet 73, and accounts for your spouse's age as well. It also projects your RMDs for future years. Follow these steps:

• Input your birthdate into the Fidelity RMD Calculator.
• Choose whether your spouse (if applicable) is your only beneficiary.
• Input your IRA account balance as of December 31 of the previous year.
• Input your spouse's date of birth.
• Input your estimated rate of return. This is the average annual growth you expect in your retirement account.

RMD calculation example:

Let's say you are a single man who turned 73 in 2024. The balance in your IRA was $250,000 on December 31, 2023, and you estimate it will grow by 5% annually. Last year (at age 73), your required minimum distribution was $9,433.96. As the graph below shows, your annual RMD will increase over the next four years, but your account balance will not dip below its original value, assuming it continues to earn the estimated 5% interest.

RMD dates to remember

Once you turn 73, it's important to be proactive about taking required minimum distributions for IRAs, or you may face penalties. Also, you can withdraw or use your traditional IRA assets at any time, but a 10% additional tax may apply if you withdraw or use IRA assets before you reach age 59-½.

Officially, RMDs are due by December 31 each year, but the IRS gives you flexibility for your first RMD. You can delay your first RMD (required at age 73 in 2025) until April 1 of the following year. If you delay your first withdrawal, you must take your second RMD by December 31 of that same year. Taking two RMDs in one year creates two taxable events, which could increase your taxable income and potentially push you into a higher tax bracket.

Penalties

The IRS imposes penalties for taking RMDs that are too small. If you withdraw less than required, the IRS charges a 25% penalty (or 10% if corrected within two years) on the difference between what you withdrew and what you should have taken. You can always take larger distributions, but the RMD sets the minimum withdrawal needed to meet IRS requirements. Withdrawals above the minimum in one year cannot be used to satisfy RMDs in future years.

What accounts require RMDs?

These are the accounts that will require you to withrdaw RMDs (as long as they are not Roth accounts).

• Traditional IRAs
• Traditional 401(k)s
• Nonprofit 403(b) plans
• Government 457 plans
• Simplified Employee Pension (SEP) IRAs
• Savings Incentive Match Plan for Employees (SIMPLE) IRAs
• Profit-sharing plans
• Other defined contribution plans

You must calculate your RMDs for each traditional IRA separately, based on its year-end balance and your life expectancy. However, you can withdraw the total RMD amount from just one IRA or any combination of your IRAs. This simplifies bookkeeping and allows you to strategically draw down an IRA, such as one with poor performance or under-performing investments.

What are the RMD rules for an inherited IRA?

The IRS states that beneficiaries of inherited IRAs follow specific RMD rules, which vary based on when the original account owner passed away, the beneficiary’s relationship to the account holder, and whether the death occurred before or after January 1, 2020.

Generally:

Spousal Options: If you inherit a Traditional, SIMPLE IRA, Rollover, or SEP-IRA from your spouse, you have multiple options, depending on whether your spouse died before or after their RMD start date (age 73 in 2025). A common choice is transferring the funds to your own IRA, but you can also take a lump-sum distribution or maintain the inherited IRA with specific RMD rules.

Non-Spousal Options: If you inherit an IRA from someone other than your spouse, withdrawal rules depend on your status as a designated beneficiary, eligible designated beneficiary (minor child, disabled individual), or non-individual, such as a trust or estate. For deaths after December 31, 2019, most non-spousal beneficiaries must withdraw all funds within 10 years, with specific RMD requirements for eligible designated beneficiaries.

Read Retirement Topics—Beneficiary on the IRS website to fully understand the rules and how they apply to your personal situation.

Other ways to calculate your RMDs

DIY: You may calculate RMDs yourself. Start by determining how much you had in your IRA account as of December 31 of the previous year. Next, you can find your life expectancy factor, or the number of additional years you expect to live, according to actuarial calculations. Divide the account balance by the life expectancy factor to get your RMD.

Visit the IRS: Or, go to the source: Visit the IRS website to find additional information on RMDs, such as what they are, the types of retirement plans that require RMDs, the timeline for taking minimum distributions and how the amount is calculated.

We strongly recommend that you seek the advice of a financial services professional with whom you have a fiduciary relationship before making any investment or significant financial decision.

Consider RMDs in the context of your broader retirement goals

To better save for retirement, consider all of your options, such as contributing to a 401(k) or IRA, or 403(b). Different accounts may have different fees that can eat into returns, in addition to different tax implications. And you should consider whether you will be required to take minimum distributions once you hit age 73. Roth IRAs don’t require RMDs, but traditional IRAs and other retirement accounts do.

Related Content

• Required Minimum Distributions (RMDs): Key Points to Know
• Roth IRAs: What They Are and How They Work
• Rolling Over a 401(k) Into an IRA
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