With the year winding down, older investors with money sitting in ordinary IRAs may soon need to withdraw at least some of it. It's called a required minimum distribution, or RMD.
What's the minimum? It depends on your age and the total market value of your retirement accounts as of the end of calendar 2024. Here's the required minimum distribution on $50,000 worth of retirement savings at a range of ages, beginning with age 73, which is when RMD rules first kick in.
- 73: $1,886.79 (3.77%)
- 75: $2,032.52 (4.06%)
- 80: $2,475.25 (4.95%)
- 85: $3,125.00 (6.25%)
- 90: $4,095.36 (8.20%)
- 100: $7,812.50 (15.62%)
The size of the required -- and taxable -- distribution grows as you age, maxing out at 50% of the prior year's ending balance for anyone lucky enough to reach the age of 120.
Important RMD rules
There are some noteworthy rules to consider here. Chief among them is that RMD rules only apply to ordinary IRAs like contributory/traditional IRAs, 401(k) accounts, or 403(b) accounts. They don't apply to Roth IRAs.
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It's also worth noting that you don't necessarily need to take an RMD from each and every IRA you own. You can combine the value of all your ordinary IRAs and take a distribution from just one. And you can do the same for 403(b) accounts, although you can't mix and match 403(b) and traditional IRA accounts. One key exception is 401(k) accounts; you must take your calculated minimum distribution from each and every one, assuming you own more than one.
As for timing, although your very first required minimum distribution doesn't need to be completed until April 1 in the year after you turn 73, subsequent RMDs must be completed by the end of the calendar year. Just bear in mind that waiting until the last minute to take your first RMD means you'll be taking two taxable distributions in the same tax year.
