Required Minimum Distributions

In the IRA Withdrawals section, we explained that qualified retirement money cannot be withdrawn until the age of 59½ years, unless you’re willing to pay the IRS penalty of 10%. There is also a second age that is important. It’s age 70½, when all American taxpayers become subject to the Required Minimum Distribution (RMD) rules. The IRS provides a table to calculate one’s RMD.


Age Distribution Factor Age Distribution Factor
70 27.4 85 14.8
75 22.9 90 11.4
80 18.7 115 1.9

How to Calculate RMD

If you want to calculate RMD, you need to collect all of the previous year-end values of your qualified investment accounts. Next, you’ll add them together. That total will be divided by the corresponding distribution factor on the IRS RMD Table.

One thing to notice is that the divisor number gets smaller as you get older. The smaller the divisor, the higher the percentage that must be withdrawn by year end to satisfy your Required Minimum Distribution. For example:

  • Your first RMD at age 70½ is 27.4, which equals a 3.6% withdrawal.
  • At age 75, your distribution factor is 22.9, a 4.4% withdrawal.
  • By age 90, the divisor is 11.9, which equals a withdrawal of 8.8%.

Regardless of age, when RMD is withdrawn, it must be reported as income.

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