How to Calculate Your Required Minimum Distribution

What an RMD is

Once you turn 73, the IRS stops letting your retirement money sit untouched. Every year you must withdraw a minimum amount from your traditional IRA or 401(k) — the required minimum distribution, or RMD — and pay income tax on it. The money went in pre-tax, and the RMD is how the government finally collects. RMDs start at 73 (SECURE 2.0: born 1951–1959; born 1960 or later, 75). Roth IRAs have no RMDs while the owner is alive. With a $500,000.00 balance at age 73, the RMD is $18,867.92 — 3.77% of the balance.

Step 1: Start with your balance

Take the balance of the account on December 31 of the year BEFORE the RMD year — not today’s balance, not the balance on your birthday, the December 31 balance. That is the number the IRS divides. With a $500,000.00 balance, the RMD is $18,867.92. With $250,000.00 it is $9,433.96; with $1,000,000.00 it is $37,735.85. The RMD scales with the balance — half the balance, half the RMD.

Step 2: Find your factor

Look up your age in the IRS Uniform Lifetime Table. At 73 the factor is 26.5; at 75 it is 24.6; at 80 it is 20.2; at 85 it is 16.0. The key concept: the factor is how many more years the IRS assumes the money must last, so the RMD is the balance spread over that span — and the factor shrinks every year, which is why the RMD grows even when the balance does not. The table ends at age 120 with factor 2.0 — “120 and over” — so at 120 the RMD is half the balance: $250,000.00 on a $500,000.00 balance, 50.00%.

Step 3: Divide

Divide the balance by the life-expectancy factor. $500,000.00 ÷ 26.5 = $18,867.92. That is the whole calculation: one division. As a percentage it is 100 ÷ 26.5 = 3.77% of the balance. At 80 the factor is 20.2, so the RMD is $24,752.48 — 4.95%. At 85 the factor is 16.0, so the RMD is $31,250.00 — 6.25%. The percentage rises every year: at 81 the RMD passes 5% of the balance (5.15%), while at 80 it is only 4.95%.

Step 4: The tax

The RMD is taxed as ordinary income at your marginal rate. At 22% the tax on a $18,867.92 RMD is $4,150.94, so after tax you keep $18,867.92 − $4,150.94 = $14,716.98. The balance after the withdrawal is $500,000.00 − $18,867.92 = $481,132.08. At 12% the tax is only $2,264.15 and you keep $16,603.77; at 37% the tax is $6,981.13 and you keep only $11,886.79. And the rate that leaves you exactly $15,000.00 after tax is 20.50% (exact 20.50%): at 20.50% the after-tax RMD is $15,000.00.

Step 5: The 5-year projection — growth vs withdrawal

Year 1 uses the balance as given — it IS the Dec 31 balance. Each later year the balance first grows by your growth rate, then the RMD is taken at that year’s factor. At 5% growth the year-2 balance is $481,132.08 × 1.05 = $505,188.68, and the year-2 RMD is $19,811.32. Year 3: $20,717.33. Year 4: $21,661.41. Year 5: $22,545.84. The five RMDs total $103,603.81. Here is the growth-vs-withdrawal tension: at 5% growth the balance still grows after the RMD, but at 0% growth the RMD eats the balance and the year-5 RMD falls to $18,548.51: the balance shrinks every year as RMDs come out, so the RMD falls even with the factor falling, and the 5-year total is $93,787.53 — not 5 × $18,867.92. At 8% growth the year-2 RMD is $20,377.36 and the 5-year total is $109,970.07.

The worked example

$500,000.00 balance, age 73, 5% growth, 22% tax. Factor: the IRS Uniform Lifetime Table gives age 73 a factor of 26.5. RMD: $500,000.00 ÷ 26.5 = $18,867.92. RMD as %: 100 ÷ 26.5 = 3.77%. Tax: $18,867.92 × 22% = $4,150.94. After-tax RMD: $18,867.92 − $4,150.94 = $14,716.98. Balance after: $500,000.00 − $18,867.92 = $481,132.08. Projection: year 2, $19,811.32; year 3, $20,717.33; year 4, $21,661.41; year 5, $22,545.84; total $103,603.81. Totals are computed from unrounded values, so rounded parts may differ by a cent from their rounded sum.

Working backwards

A $25,000.00 RMD at age 73 needs a balance of $662,500.00 (exact $662,500.00): at $662,499.00 the RMD is $24,999.96, at $662,501.00 it is $25,000.04. A $15,000.00 after-tax RMD needs $509,615.38 (exact $509,615.3846): the RMD is $19,230.77 and the after-tax RMD is $15,000.00. The first age where that year’s RMD exceeds $25,000.00 is 80 (RMD $25,729.85); at age 79 it is only $24,626.53. The tax rate for a $15,000.00 after-tax RMD is 20.50% (exact 20.50%). The growth rate for a $20,000.00 year-2 RMD is 6.00% (exact 6.0000%): at 6.00% the year-2 RMD is $20,000.00 — on the nose — and at 5.99% it is $19,998.11. The first age where the RMD exceeds 5% of the balance is 81 (5.15% vs 4.95% at 80).

When the numbers change

At 85 the RMD is $31,250.00. At 0% growth the year-5 RMD is $18,548.51 and the 5-year total is $93,787.53; at 8% growth the total is $109,970.07. A $1,000,000.00 balance doubles everything: the RMD is $37,735.85 and the 5-year total is $207,207.63. At age 100 the factor is 6.4 and the RMD is $78,125.00 (15.63% of the balance). With a $0 balance the RMD is $0.00 — but the RMD as % is still 3.77%.

What the RMD cannot do

This model ignores state tax, the 10-year inherited-IRA rule, QCDs and Roth accounts, and it assumes a single account growing at a single rate. The deadline is what bites: the 25% missed-RMD penalty (reduced to 10% if corrected promptly) applies to the amount you should have taken — on a $18,867.92 RMD that is $4,716.98 at 25% or $1,886.79 at 10%. The deadline is Dec 31, except the first RMD may wait until April 1 of the following year. Age below 73 is not a smaller RMD — it is no RMD at all.

How this connects

Run your own numbers with the RMD calculator; for the table itself, see the 2026 RMD table.