This Is Exactly How the IRS Determines Your RMD

Once you reach the age of 73, you’re legally required to take your Required Minimum Distributions (RMDs), ensuring the government can collect taxes on your money.

If you’re already above 73, or are nearing that age, it’s very important to know how to calculate your required minimum distribution – which you should also review with a financial advisor.

To calculate your RMD, the IRS will use a formula that includes your total account balances, your age, your life expectancy, and your beneficiary life expectancies.

The IRS then divides the total balance by your life expectancy factor. That’s the age to which you’re expected to live until. For an example of how that works, here’s a link to the IRS Uniform Lifetime Table.

Let’s say you’re 73 years old. You would have a Life Expectancy Factor of 26.5. If you have an account balance of $250,000 as of December 31 of last year, you would divide $250,000 by 26.5, which would give you an RMD distribution amount of $9,433.96.

🚨 Brand New: The IRS Delays RMD Final Rules Again

If you are managing an inherited retirement account alongside your own RMDs, the rules have been notoriously muddy. The IRS issued Announcement 2026-7, which pushes back the enforcement of strict new final regulations for certain beneficiaries until at least 2027 (specifically, no earlier than six months after the final regulations are formally published). For the remainder of the year, the IRS specifies that taxpayers are permitted to use a “reasonable, good-faith interpretation” of the rules. If you are navigating the complex 10-year distribution window for inherited IRAs, you have an extended grace period to adjust your withdrawal strategies.

There are Different Rules for RMDs Depending on Your Retirement Account 

According to the IRS, “The RMD rules apply to all employer-sponsored retirement plans, including profit-sharing plans, 401(k) plans, 403(b) plans, and 457(b) plans. The RMD rules also apply to traditional IRAs and IRA-based plans such as SEPs, SARSEPs, and SIMPLE IRAs. The RMD rules do not apply to Roth IRAs or Designated Roth accounts while the owner is alive. However, RMD rules do apply to the beneficiaries of Roth IRA and Designated Roth accounts.”

With an IRA, you must calculate RMD for each IRA separately. You can combine the RMDs for all of your IRAs and withdraw the total amount from a single IRA.

With a defined contribution plan, such as a 401(k), you are required to take separate RMDs for each plan. With a Roth IRA, you do not have to take RMDs if you are the original account holder. However, beneficiaries of a Roth IRA are subject to RMDs.

In addition, if you have a spouse who is 10 years younger than you, and is listed as a 100% beneficiary of your RMD, you need to calculate your RMD using a Joint Life Expectancy Table. The calculation includes your age and your spouse’s age, which can result in longer life expectancy, which can also reduce your required RMD. It’s another way for the IRS to make your life even more fun.

Erase Your RMD Bill via a QCD

You do not have to watch your RMD push you into a higher tax bracket. If you are age 70½ or older, you can utilize a Qualified Charitable Distribution (QCD) to send money directly from your traditional IRA to an eligible charity. Thanks to inflation indexing, the annual QCD limit has climbed to $111,000. The amount you transfer via a QCD counts directly toward satisfying your annual RMD for the year, but it is entirely excluded from your adjusted gross income (AGI). To make it count, the funds must move directly from your custodian to the charity before December 31.

The “Surviving Spouse” RMD Advantage

SECURE Act 2.0 introduced a powerful structural choice for widows and widowers. If you are a surviving spouse who is the sole beneficiary of your late partner’s retirement account, you can formally elect to be treated as the deceased participant for RMD purposes. If your deceased spouse was younger than you, making this election allows you to delay taking mandatory distributions until the year your spouse would have turned 73. Furthermore, when distributions finally begin, you can use the more favorable Uniform Lifetime Table rather than the harsher Single Life Expectancy Table typically reserved for beneficiaries.

There are Key Rules to Follow with RMDs

One, at 73, you are required to take your RMD. That will go up to 75 by 2033.

Two, there is a required beginning date, which is April 1 of the year after the year when you turn 73. So, if I turn 73 in 2025, I would have until April 1, 2026 to take my first RMD, which would cover my RMD for 2025. I would also have to take another RMD by year-end to account for my 2026 RMD as well. 

Three, if you do not take your RMD in time, you could see penalties of up to 25% of the outstanding RMD you had to take. It was once as high as 50%. While the standard penalty for missing an RMD deadline is 25% of the unwithdrawn amount, SECURE 2.0 provides an explicit escape hatch. If you catch your mistake and complete a corrective distribution in a timely manner—generally within a two-year correction window before an IRS audit—the excise penalty drops significantly to 10%. Under current clarifying guidelines, a corrective distribution only cures the past missed amount and cannot be credited toward satisfying the current calendar year’s standard RMD requirement.

It ensures the IRS gets its money one way or another. 

Four, make sure you don’t get caught up in an RMD pitfall. For example, make sure you’re using the correct account balance. The wrong balance can lead to an RMD that’s too low. You also want to make sure you’re using the correct life expectancy factor, as we noted a moment ago. And you want to make sure that you’re accounting for all retirement accounts.

Five, before you start with an RMD, visit with your financial advisor.

The last thing you want to do is calculate the RMD incorrectly, use the wrong life expectancy factor, or take a lower RMD than expected. All can lead to unnecessary calls from the IRS.

Editor’s Note: This article contains expanded guidance incorporating IRS Announcement 2026-7 regarding the extended transition period for inherited account rules, updated annual Qualified Charitable Distribution indexing limits of $111,000, specialized structural distribution frameworks for surviving spouse beneficiaries, and the ten percent penalty mitigation window established under SECURE Act 2.0 clarifying provisions.