Required minimum distributions (RMDs) are a way for the IRS to ensure you eventually pay your fair share of taxes on tax-advantaged accounts like 401(k)s and traditional IRAs.
RMDs begin the year you turn 73, and the exact amount you're required to withdraw varies depending on your account balance and age.
To get a gist of how much your RMDs can be, we'll take a look at how it works for someone with $250,000 in their retirement account.
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How to figure out your required minimum distribution
Figuring out your RMD for the year can be done in three easy steps:
- Find out your account balance at the end of the previous year.
- Look for the life expectancy factor (LEF) corresponding to your age and marital status. The IRS provides these numbers.
- Divide your account value by your LEF.
As an example, check out the table for someone single with $250,000 in their retirement account as of the end of 2024:
| Age | Life Expectancy Factor | Required Minimum Distribution |
|---|---|---|
| 73 | 26.5 | $9,434 |
| 74 | 25.5 | $9,804 |
| 75 | 24.6 | $10,163 |
| 76 | 23.7 | $10,549 |
| 77 | 22.9 | $10,918 |
| 78 | 22.0 | $11,364 |
| 79 | 21.1 | $11,848 |
| 80 | 20.2 | $12,376 |
Data source: IRS. Table by author. RMDs rounded to the nearest dollar.
Failing to take your RMD will result in a penalty of 25% of the amount you failed to withdraw. However, correcting your mistake and taking your RMD within two years of the missed deadline could reduce the penalty to 10%.
For instance, if a 74-year-old only withdrew $4,804, they would initially be penalized $1,250 (25% of the remaining $5,000). If they correct the mistake within two years, the penalty could be reduced to $500 (10% of the remaining $5,000).
In either case, it's best to stay up to date on your RMD obligations to avoid easily avoidable penalties.
