1. What is Required Minimum Distribution (RMD)?

Required Minimum Distribution (RMD) is the minimum amount that must be withdrawn annually from traditional IRA and employer-sponsored retirement accounts once the account holder reaches age 72 (or 70½ if born before July 1, 1949).

2. How Does the Calculator Work?

The calculator uses the RMD formula:

Where:

• \( RMD \) — Required Minimum Distribution (currency units)
• \( B \) — Account balance (currency units)
• \( L \) — Life expectancy factor (years)

Explanation: The IRS provides life expectancy factors based on your age in their Uniform Lifetime Table. This simple division calculates your required annual withdrawal.

3. Importance of RMD Calculation

Details: Calculating RMD accurately is crucial to avoid substantial IRS penalties (up to 50% of the amount that should have been withdrawn). Proper RMD planning helps manage tax liabilities in retirement.

4. Using the Calculator

Tips: Enter your total account balance and the appropriate life expectancy factor from the IRS Uniform Lifetime Table corresponding to your age. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: When must I start taking RMDs?
A: You must begin taking RMDs from your traditional IRA by April 1 of the year following the year you turn 72 (or 70½ if born before July 1, 1949).

Q2: How do I find my life expectancy factor?
A: The IRS provides Uniform Lifetime Tables that list life expectancy factors based on your age. You can find these tables in IRS Publication 590-B.

Q3: Are Roth IRAs subject to RMD rules?
A: No, Roth IRAs are not subject to RMD rules during the original owner's lifetime.

Q4: What happens if I don't take my full RMD?
A: The IRS imposes a hefty penalty of 50% of the amount that should have been withdrawn but wasn't.

Q5: Can I withdraw more than the RMD amount?
A: Yes, you can always withdraw more than the required minimum, but you cannot apply the excess to future year's RMDs.