How to Figure an IRA RMD

IRA RMDs are the minimum required distributions that you must take from your traditional IRA starting in the year that you turn 70.5 years old. If you fail to take at least the minimum amount, you will be liable for a 50 percent penalty on the money you did not take out. For example, if you were supposed to take out $19,000 but only took out $7,000, you would owe $6,000 in penalties. RMDs do not apply to Roth IRAs.

Instructions

1. Calculate the value of all of your traditional IRAs at the end of the previous calendar year. You can find this information on the end-of-year statements sent to you by the company that you have your account with.

2. Find the IRS life expectancy table that applies to you. The first table is used if you inherited the IRA, the second table is used if your spouse is the only beneficiary of the IRA and your spouse is a decade or more younger than you.

3. Use the appropriate table to determine the expected distribution period for your IRA. For example, if you were using table three and your age is 76, your distribution period would be 22 years.

4. Calculate the amount of your IRA RMD by dividing the value of your traditional IRAs by the distribution period. For example, if your total value was $220,000 and your distribution period was 22 years you would have to withdraw at least $10,000 that year to avoid a penalty.

Tips & Warnings

• Do not forget to report distributions from your traditional IRAs as part of your taxable income.

References

• 'Tis the Season for Minimum Required Distributions
• IRS Publication 590