Required Minimum Distributions, When They Start and How They're Calculated
The IRS age rule and divisor table behind required minimum distributions from traditional retirement accounts, with a worked calculation.
Money in a traditional retirement account grows tax-deferred, but that deferral doesn't last forever. At a specific age, the IRS requires you to start withdrawing a minimum amount each year, whether you need the money or not, and the calculation behind that minimum follows a published formula rather than a guess.
When RMDs start
According to the IRS, required minimum distributions generally must begin the year you turn 73. You can delay your very first RMD until April 1 of the following year, but if you do, both that delayed first RMD and the second year's on-time RMD land in the same calendar year, which can push you into a higher tax bracket than spreading them out would have. The rule applies to traditional IRAs, SEP and SIMPLE IRAs, and most employer plans including 401(k), 403(b), and 457(b) accounts. Roth IRAs are exempt from RMDs during the owner's lifetime, though that exemption does not extend to people who inherit a Roth IRA as a beneficiary.
If you're still working and participate in your current employer's retirement plan, you may be able to delay RMDs from that specific plan until you actually retire, unless you own 5 percent or more of the business sponsoring it. That delay does not extend to IRAs or old employer plans you're no longer contributing to.
How the amount is actually calculated
The IRS calculation is simple arithmetic once you have the two inputs: your account balance as of December 31 of the prior year, divided by a life expectancy factor from a table the IRS publishes in Publication 590-B. Most account owners use Table III, the Uniform Lifetime Table, which applies unless your sole beneficiary is a spouse more than 10 years younger than you (in which case a different table, the Joint and Last Survivor table, applies and generally produces a smaller required withdrawal).
Here is the relevant stretch of the Uniform Lifetime Table:
| Age | Life expectancy factor |
|---|---|
| 73 | 26.5 |
| 74 | 25.5 |
| 75 | 24.6 |
| 76 | 23.7 |
| 80 | 20.2 |
A worked example
Say a traditional IRA held $500,000 on December 31 of last year, and the owner turns 73 this year.
$500,000 ÷ 26.5 = $18,868
That $18,868 is the minimum that must come out this year. The following year, if the balance (after the withdrawal and any investment growth) sits at, say, $490,000, and the owner turns 74, the new factor is 25.5:
$490,000 ÷ 25.5 = $19,216
Notice that the dollar RMD can rise even though the account balance fell, because the life expectancy factor shrinks faster than the balance in many cases. By age 80, the same starting balance pattern produces a withdrawal rate of roughly 5 percent of the account per year (1 ÷ 20.2), compared with roughly 3.8 percent at age 73 (1 ÷ 26.5). The required percentage climbs every year by design, since the table is built to roughly track remaining life expectancy.
Multiple accounts and how they combine
If you own more than one IRA, the IRS requires you to calculate the RMD separately for each IRA, but you're allowed to withdraw the combined total from just one of them or split it across several, as long as the total meets or exceeds the sum of the individual requirements. The rule is different for workplace plans: a 401(k) or 457(b) RMD generally must come out of that specific plan account, not pooled with your IRA withdrawals. 403(b) accounts follow the IRA-style aggregation rule among themselves, but still separately from 401(k) or IRA totals.
What happens if you miss one
The IRS treats a missed or shortfall RMD as a reportable event with an excise tax attached, calculated on the amount that should have been withdrawn but wasn't. The penalty can be reduced if the shortfall is corrected within a specified correction window, which is one more reason the calculation is worth doing deliberately each year rather than leaving it to a once-a-decade memory check.
Key takeaways
- RMDs generally must begin the year you turn 73, calculated by dividing your account's December 31 balance by a life expectancy factor from the IRS Uniform Lifetime Table.
- At age 73, the factor is 26.5; at age 80, it drops to 20.2, meaning the required withdrawal percentage rises every year even if your balance doesn't grow.
- A $500,000 traditional IRA balance produces an RMD of about $18,868 at age 73, using the official $500,000 ÷ 26.5 calculation.
- IRA RMDs can be combined and withdrawn from any one IRA you own, but 401(k) and 457(b) RMDs generally must come out of each specific plan separately.