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What Is an RMD and Who Must Take One?

A Required Minimum Distribution (RMD) is the minimum amount the IRS requires you to withdraw each year from tax-deferred retirement accounts — Traditional IRAs, SEP IRAs, SIMPLE IRAs, 401(k)s, 403(b)s, 457(b)s, and similar plans. Because contributions to these accounts were made pre-tax, the IRS eventually mandates withdrawals so the funds get taxed as ordinary income.

The SECURE 2.0 Act of 2022 raised the RMD starting age to 73 for anyone who hadn't yet turned 72 by the end of 2022, with a further increase to 75 scheduled for those born in 1960 or later. Roth IRAs are a notable exception — they are not subject to RMDs during the original owner's lifetime, making Roth conversions a popular strategy to reduce future mandatory withdrawals.

Each year's RMD is calculated using the account balance as of December 31 of the prior year divided by a life-expectancy factor from an IRS table. This calculator uses the Uniform Lifetime Table (IRS Publication 590-B, Table III), which applies to the vast majority of account owners. A separate Joint Life and Last Survivor Table applies only when the sole beneficiary is a spouse more than 10 years younger.

How This Calculator Projects Future RMDs

The formula for each year's RMD is straightforward: RMD = Prior-Year-End Balance ÷ Distribution Period, where the distribution period comes from the IRS table for your age. What makes projection complex is that the balance itself changes each year — it's reduced by the RMD withdrawal, then grown by investment returns before the next year's calculation.

This calculator runs a year-by-year loop: withdraw the RMD, apply your expected return to the remainder, then compute next year's RMD with the new balance and age. The result is a projection you can trace from age 73 to any target age (default 100), showing both the growing RMD amounts (as the distribution period shrinks with age) and the declining account balance.

An important nuance: your first RMD can technically be deferred to April 1 of the year after you turn 73. Most advisors recommend against deferral because taking two RMDs in one calendar year compounds tax impact. This calculator uses the simpler assumption that you take each RMD in the year it's due.

Worked Example

Scenario: $425,000 IRA balance as of Dec 31, account owner age 73, 22% marginal rate, 5.5% expected return.

  • Distribution period at age 73 (Uniform Lifetime Table) = 26.5
  • Year-1 RMD = $425,000 ÷ 26.5 = $16,038
  • Estimated federal tax (22%) = $3,528
  • Net after-tax distribution = $12,509
  • Remaining balance grows: ($425,000 − $16,038) × 1.055 = $432,137 enters next year
  • Year-2 RMD (age 74, divisor 25.5) = $432,137 ÷ 25.5 = $16,946

RMD amounts grow each year as the distribution period shrinks — even if the balance stays flat. At higher return rates, the balance grows faster than withdrawals, so RMDs can increase substantially in dollar terms.

Frequently Asked Questions

What age do I have to start taking RMDs?

Under the SECURE 2.0 Act (2022), the RMD starting age is 73 for anyone who turns 72 after December 31, 2022. It rises further to 75 for those born in 1960 or later (starting in 2033). Roth IRAs are not subject to RMDs during the original owner's lifetime — only traditional IRAs, 401(k)s, 403(b)s, and similar pre-tax accounts are affected.

What is the penalty for missing an RMD?

Under SECURE 2.0, the penalty for failing to take a required minimum distribution dropped from 50% to 25% of the missed amount. If you correct the shortfall within two years (the "correction window"), the penalty is further reduced to 10%. File IRS Form 5329 to report and pay the excise tax.

Can I delay my first RMD?

Yes — your very first RMD can be deferred until April 1 of the year after you turn 73. However, this means you must take two RMDs in that second year (one by April 1 and the normal second-year RMD by December 31), which could push you into a higher tax bracket. Most advisors recommend taking the first RMD in the year you turn 73 to smooth out income.

Do RMDs affect Social Security taxes or Medicare premiums?

Yes on both counts. RMDs count as ordinary income and can push more of your Social Security benefits into taxable territory (up to 85% becomes taxable). They also count toward the MAGI thresholds for Medicare IRMAA surcharges — the income-related adjustment to Part B and Part D premiums. Roth conversions before age 73 are a common strategy to reduce future RMD size and these secondary effects.

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