Required Minimum Distribution or better known as the RMD speaks for itself. Since a person cannot keep retirement funds in a retirement account indefinitely, one must start making withdrawals from the account.
Generally, most people aren’t required to take withdrawals until they reach the age of 72. The age limit was changed after the SECURE Act which was signed into law on December 20, 2019. Before the SECURE Act, the age limit was 70 and a half. The RMD refers to the amount that must be taken out from the retirement account every year.
The RMD amount must be withdrawn every year from the retirement account but the RMD amount is different for everyone. However, it applies to everyone who has the following types of retirement accounts.
- 401(k) plans
- 403(b) plans
- 457(b) plans
- SEP IRAs
- SIMPLE IRAs
- other defined contribution plans
- profit-sharing plans
- traditional IRAs
Calculate Required Minimum Distributions
The required minimum distribution is the balance of the account as of the end of the preceding calendar year divided by the distribution period from the IRS’ Uniform Lifetime Table.
You can figure out the RMD by taking a look at the RMD calculator worksheet.
The worksheet is different depending on a few things. If you’re married and your spouse is the sole beneficiary of your IRA and 10 or more years younger than you, use the following worksheet.
IRA worksheet for married filing jointly if a spouse is the sole beneficiary and 10 or more years younger
If not, you can use the following worksheet to calculate your required minimum distribution.