How the IRS Calculates Required Minimum Distributions from Retirement Accounts

If you have money in a traditional IRA, SEP IRA, SIMPLE IRA, or a workplace plan like a 401(k), the IRS eventually requires you to start pulling money out, whether you need it or not. That withdrawal is called a required minimum distribution, or RMD, and the amount is not something you choose — it's calculated using an IRS table and your account balance. This explainer walks through exactly how that calculation works, using the IRS's own example and a worked-out scenario of a 75-year-old with a $500,000 balance.

Who has to take RMDs, and when do they start

Under current law, you generally must begin taking RMDs starting at age 73, if you reach age 72 after December 31, 2022. This requirement applies broadly: traditional IRAs, SEP IRAs, SIMPLE IRAs, 401(k) plans, 403(b) plans, 457(b) plans, profit sharing plans, and other defined contribution plans all fall under the same RMD rules for original account holders and their beneficiaries. Roth IRAs work differently — as long as you're the original owner and you're alive, you're not required to take any withdrawals from a Roth IRA or from a designated Roth account inside a 401(k) or 403(b). That exemption ends at death, though: anyone who inherits a Roth IRA or a designated Roth account becomes subject to the same RMD rules as beneficiaries of traditional accounts.

The three-step worksheet the IRS actually uses

The core calculation is simpler than it sounds, and the IRS lays it out as a three-line worksheet for non-inherited traditional IRAs. First, you take your IRA balance as of December 31 of the previous year. Second, you look up the distribution period tied to your age this year, found in the Uniform Lifetime Table, known formally as Table III in IRS Publication 590-B. Third, you divide the balance from step one by the distribution period from step two, and that quotient is your RMD for the year. This worksheet applies specifically to non-inherited traditional IRAs where your spouse is not the sole beneficiary more than 10 years younger than you; different rules and tables apply to inherited accounts and to certain spousal situations.

In Publication 590-B, the IRS walks through a 75-year-old with a $100,000 IRA balance using Table III, where the applicable denominator is 24.6, producing a required minimum distribution of $4,065 for the year. That example assumes the owner is married with a spouse who is the sole IRA beneficiary and only 6 years younger, which is why Table III applies rather than Table II. For any 75-year-old who qualifies to use Table III, the applicable denominator is 24.6, whether the account holds $100,000 or a much larger sum.

IRS Publication 590-B's own worked example for a 75-year-old IRA owner.

Source: www.irs.gov

Worked example: a 75-year-old with a $500,000 balance

Suppose you turn 75 this year and your traditional IRA held $500,000 at the end of last year. For this example, we're assuming you are not married to a sole-beneficiary spouse more than 10 years younger than you, so Table III applies rather than Table II. At age 75, the Table III distribution period is 24.6. Following the same division the IRS uses in its own example — balance divided by distribution period — your required minimum distribution for the year would be $20,325.20. Notice that the factor of 24.6 stays the same regardless of your balance; it's your account size divided by that fixed age-based number that determines the dollar amount you must withdraw.

• balance: 500000
• factor: 24.6
• Formula: balance / factor
• Result: 20325.2

How to walk through your own RMD calculation

1. Confirm which table applies to your situation; most owners use Table III, the Uniform Lifetime Table, unless their spouse is the sole beneficiary and more than 10 years younger.
2. Look up the distribution period listed for your age this year in Table III.
3. Divide your prior year-end balance by that distribution period to get your required minimum distribution for the year.
4. Withdraw at least that amount before the applicable deadline to avoid the excise tax on a shortfall.

Which accounts require RMDs and which don't

Account type	RMDs required while owner is alive?
Traditional IRA, SEP IRA, SIMPLE IRA	Yes, generally starting at age 73 for those reaching 72 after December 31, 2022
401(k), 403(b), 457(b), profit sharing, other defined contribution plans	Yes, same RMD rules apply to original account holders
Roth IRA (original owner, living)	No, owners are not required to take withdrawals while alive
Designated Roth account in 401(k) or 403(b) (original owner, living)	No, same exemption applies while the owner is alive
Inherited Roth IRA or Roth account (beneficiary)	Yes, beneficiaries are subject to RMD rules

Comparing account types under RMD rules.

What happens if you miss or shortchange an RMD

This is a meaningful incentive to fix a missed distribution quickly rather than let it sit uncorrected, since the tax is calculated on the shortfall itself, not your whole account balance. It's also worth noting that a full or partial waiver of the excise tax can be requested if the shortfall was due to reasonable error and you're taking steps to remedy it, though the details of that request process are outside the scope of this basic calculation walkthrough.

Key takeaways

• RMDs generally must begin at age 73 for those who reach age 72 after December 31, 2022, and apply to traditional IRAs, SEP IRAs, SIMPLE IRAs, and most workplace defined contribution plans.
• Missing an RMD risks a 25% excise tax on the shortfall, cut to 10% if corrected within two years.

Frequently asked questions

Do I use the same table every year as I age?

You use Table III, the Uniform Lifetime Table, in most cases, but the distribution period itself changes each year based on your current age, and a different table (Table II) applies if your spouse is the sole beneficiary and more than 10 years younger than you.

What if I have a Roth IRA — do I need to calculate an RMD at all?

Not while you're alive and the original owner; Roth IRA owners and owners of designated Roth accounts in a 401(k) or 403(b) are not required to take any withdrawals during their lifetime. That exemption does not carry over to whoever inherits the account, since beneficiaries of Roth IRAs are subject to the standard RMD rules.

What happens if I forget to take my RMD one year?

You could owe a 25% excise tax on the amount you should have withdrawn but didn't, though that rate falls to 10% if you withdraw the missed amount within a two-year correction window.

Because the exact table you use, your distribution period, and any spousal exceptions depend on your personal situation, it's worth reviewing the [Uniform Lifetime Table and worksheet](https://www.irs.gov/publications/p590b) directly against your own account statements before finalizing a withdrawal amount.

Sources

• www.irs.gov
• www.irs.gov
• www.irs.gov