Under the IRS SECURE Act 2.0, the age to begin taking Required Minimum Distributions (RMDs) from traditional IRAs, 401(k)s, and 403(b) plans is age 73 (rising to age 75 in 2033). Failing to withdraw your mandatory amount triggers a steep 25% IRS excise tax penalty on the shortfall.
The 3-Step RMD Calculation
- Obtain your prior year-end fair market value (FMV) as of December 31.
- Find your life expectancy factor in the IRS Uniform Lifetime Table (Table III).
- Divide the account balance by your distribution factor.
IRS RMD Formula
Annual RMD = Prior Year-End Account Balance (Dec 31) ÷ IRS Life Expectancy Factor
IRS Uniform Lifetime Table Sample Factors
| Retiree Age | IRS Distribution Factor | Required Distribution % | RMD on $500,000 Portfolio |
|---|---|---|---|
| 73 | 26.5 | 3.77% | $18,867.92 |
| 75 | 24.6 | 4.07% | $20,325.20 |
| 78 | 22.0 | 4.55% | $22,727.27 |
| 80 | 20.2 | 4.95% | $24,752.48 |
| 85 | 16.0 | 6.25% | $31,250.00 |
| 90 | 12.2 | 8.20% | $40,983.61 |
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