Tax-deferred doesn’t mean tax-free forever
Traditional 401(k)s and IRAs let your money grow without annual tax on the gains, but the IRS eventually wants its share. Once you hit your RMD age, you’re required to withdraw — and pay ordinary income tax on — a minimum amount every year, whether you need the money or not. Miss it, and the penalty is steep: 25% of the amount you should have withdrawn, reduced to 10% if corrected within two years.
Your start age depends on your birth year
SECURE 2.0 raised the RMD age in stages: 73 for anyone born 1951 through 1959, and 75 for anyone born 1960 or later. This isn’t a guess or a rule of thumb — it’s the specific age written into the law based on your birth year, and the calculator above applies it directly.
How the required amount is actually calculated
Each year’s RMD is your account balance as of December 31 of the prior year, divided by a “life expectancy factor” from the IRS Uniform Lifetime Table — a number that drops every year as you age, which mechanically increases the percentage of your balance you’re required to withdraw. At 73, the factor is 26.5, meaning roughly 3.8% of your balance. By 90, the factor drops to 12.2 — over 8%. This isn’t arbitrary; it’s designed so the account draws down over your expected remaining lifetime rather than growing indefinitely tax-deferred.
Why the required percentage climbs even if your balance doesn’t shrink
If your account earns a reasonable return, your balance can keep growing in dollar terms even while you’re taking RMDs — especially in the earlier RMD years, when the required withdrawal percentage is still relatively low. But the required withdrawal percentage only moves in one direction: up, every single year, regardless of what the market does. Eventually the withdrawal percentage outpaces even a strong return, and the balance starts to decline. The schedule above shows exactly where that turning point lands for your numbers.
What multiple accounts change
If you have RMDs from more than one IRA, you can total them and withdraw the combined amount from any one IRA or a mix, as long as the total is met. Multiple 401(k)s work differently — each 401(k)’s RMD generally has to come out of that specific account. This calculator treats your balance as a single combined figure; if your real situation spans several accounts of different types, the account-level rules matter for how you actually execute the withdrawal, even though the total dollar amount required is calculated the same way.
Using this calculator
Enter your actual combined tax-deferred balance and your real birth year for an accurate start age. Note that this models the common case using the standard Uniform Lifetime Table — if your spouse is your sole beneficiary and more than 10 years younger, your real RMD is smaller than what’s shown here, and a tax professional can walk you through the alternate table that applies.
This article is for educational purposes only and isn't legal, financial, or tax advice. See our Disclaimer for details.
