One of the benefits of retirement accounts like 401(k)s and traditional IRAs is the upfront tax break you get by lowering your taxable income with contributions, while they also grow tax-free until retirement. However, if you're familiar with Uncle Sam, you know the IRS eventually wants its cut, and it does so by taxing your withdrawals from these accounts down the road.

To prevent a situation where someone doesn't make any withdrawals to avoid taxes entirely, the IRS requires minimum distributions (RMDs) that begin the year you turn 73. The amount of your RMD will depend on your current age and account balance at the end of the previous year. Read on to see it in action for someone with $500,000 in their retirement accounts.

Person at laptop.

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How to calculate your required minimum distribution

You can calculate your RMD in three steps:

  1. Find your account balance at the end of the previous year.
  2. Look for the life expectancy factor (LEF) corresponding to your age and marital status (the IRS provides these numbers).
  3. Divide your account value by your LEF.

Here is a sampling of the RMDs for someone single with $500,000 in a retirement account as of the end of 2024:

Age Life Expectancy Factor Required Minimum Distribution
73 26.5 $18,868
74 25.5 $19,608
75 24.6 $20,325
76 23.7 $21,097
77 22.9 $21,834
78 22.0 $22,727
79 21.1 $23,697
80 20.2 $24,752

Data source: IRS. RMDs rounded to the nearest dollar.

These life expectancy factors would also apply to married account holders who aren't more than 10 years older than their spouses or whose spouses aren't the sole beneficiaries of their IRAs.

Failing to take your RMD will result in a 25% penalty calculated based on the amount you failed to withdraw. In the scenario above, this mistake adds up to thousands of dollars. Fortunately, if you correct the mistake (by withdrawing the appropriate amount) within two years, the penalty is reduced to 10%.