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 The smaller the divisor, the higher the percentage that must be withdrawn by year end to satisfy your Required Minimum Distribution.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Regardless of age, when RMD is withdrawn, it must be reported as income.