How to Calculate the RMD for Two Retirement Accounts
Retirement is a time to rejoice in what you have accomplished in life and enjoy the fruits of your labor. Today, our "fruits" are protected in a variety of investment accounts and are surrounded by a cloud of mitigation and laws and requirements.
All retirement accounts have a required minimum distribution, or RMD, of assets. Each year after you reach the age of 70-1/2, the IRS requires you to withdraw a minimum amount of money from each of your retirement accounts. This money is considered income, and is taxed as well. Having multiple retirement accounts is a great idea, because it diversifies your portfolio. However, it also makes it slightly more complicated to determine your RMD. This article will take you through the basic steps of calculating your RMD for two retirement accounts.
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Instructions
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Find your year-end balance from the previous tax year. Locate your "age-based factor" on the Uniform Lifetime Table on the IRS website. (Follow the link in Resources.) Your RMD is based on these two factors; since they change every year, you will need to determine your RMD annually.
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Divide your year-end account balance from the previous year by your age-based factor to get your RMD for each separate account type (ie IRA, 403b, etc.).
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Withdraw the RMD for each account type. You may withdraw the sum entirely from one account of any given type, but you must withdraw separate amounts for each type of account in order for the withdrawn funds to count toward your RMD.
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Tips & Warnings
Consult a tax and financial-planning professional for the most accurate calculation of your RMD for each account.
