What an RMD Actually Is
Traditional IRAs and 401(k)s give you a tax deduction when money goes in — the IRS lets it grow tax-deferred, but not forever. Required minimum distributions are the mechanism that finally collects the tax: starting at a certain age, you must withdraw a minimum amount each year and pay ordinary income tax on it. Skip an RMD and the penalty is steep — up to 25% of the amount you should have taken (reduced to 10% if corrected promptly).
The formula is simple division: your account balance on December 31 of last year divided by a life-expectancy divisor from the IRS Uniform Lifetime Table. At 73 the divisor is 26.5, so a $500,000 balance means an $18,868 RMD. Each year the divisor shrinks as life expectancy shortens, so RMDs grow as a percentage of the balance — by 90 the divisor is 12.2, roughly 8.2% per year.
When RMDs Begin: The SECURE Rulebook
The starting age has moved twice. Under SECURE 2.0: if you were born 1950 or earlier, RMDs began at 72; born 1951–1959, they begin at 73; born 1960 or later, they begin at 75. Your first RMD can be delayed until April 1 of the year after you reach the starting age — but that bunches two RMDs into one tax year, which often pushes you into a higher bracket. Most planners take the first RMD in the actual starting year.
Which accounts? Traditional, SEP, and SIMPLE IRAs, plus 401(k), 403(b), and 457(b) plans from former employers. Roth IRAs have no RMDs for the original owner — ever — which is why Roth conversions in your 60s are such a popular RMD-reduction strategy. Roth 401(k)s used to have RMDs but no longer do as of 2024.
Reading the Uniform Lifetime Table
The table assumes a beneficiary 10 years younger than you — it is joint life expectancy, which is why the divisors look generous. Unless your spouse is more than 10 years younger (a special table applies) or you inherited the account (different rules entirely), the Uniform Lifetime Table is your table. The calculator above has the full current table built in, ages 72 through 120.
One subtlety: the balance used is the prior December 31 value, adjusted for any outstanding rollovers. Mid-year market swings do not change this year's RMD — good news in a down year is that next year's RMD drops with the balance; bad news in an up year is the reverse.
The 10-Year Projection: Why It Matters
A single year's RMD is a tax bill; the projection is a strategy tool. Watch how RMDs grow as divisors shrink: that $18,868 at 73 can exceed $40,000 by the mid-80s even with modest growth. For many retirees, RMDs eventually exceed spending needs, forcing taxable withdrawals that push up Medicare IRMAA surcharges and the taxation of Social Security benefits.
Seeing the curve early — in your 60s, before RMDs start — is when you can still act: Roth conversions in low-income years, strategic QCDs from 70½ onward, and spending down traditional balances before the divisor math takes over. The projection assumes steady growth and no extra withdrawals; reality will wobble, but the shape of the curve does not lie.
QCDs: The Charitably Inclined Retiree's Best Friend
From age 70½, you can send up to $108,000 per year (2025, indexed) directly from your IRA to charity as a qualified charitable distribution. The QCD counts toward your RMD but is excluded from taxable income entirely — better than a deduction, because it never hits your AGI. Lower AGI means lower Medicare premiums, less Social Security taxation, and more room under various thresholds.
Rules that trip people up: the money must go directly from the IRA custodian to the charity — touch it and it is a taxable distribution. Donor-advised funds and private foundations do not qualify. And you cannot also claim a charitable deduction for the same dollars (no double dip). Enter a planned QCD above to see the taxable remainder of your RMD.
Strategies to Shrink Future RMDs
Roth conversions in your 60s — especially the gap years between retirement and Social Security/RMDs — move money from "taxed later at unknown rates" to "never taxed again," directly reducing the balance that future RMDs divide. Convert up to the top of your current bracket each year; the calculator's projection shows what is at stake.
Delay Social Security to 70 while living off traditional balances: you spend down the RMD base and maximize the inflation-protected benefit. Still working at 73? Your current employer's 401(k) is exempt from RMDs until you retire (the "still working" exception — though it does not apply to IRAs or old employers' plans). And QLACs (deferred annuities inside retirement accounts, up to $200,000) are excluded from the RMD calculation until payments begin at 85.
Deadlines and Penalties
The deadline is December 31 every year, no exceptions after the first. Miss it and the excise tax is 25% of the shortfall — harsh, though Congress made it correctable to 10% if you fix it promptly and file the right forms. With multiple IRAs, you compute each account's RMD but may aggregate — withdraw the total from any combination of your IRAs. 401(k)s do not aggregate: each plan's RMD must come from that plan.
Custodians calculate RMDs for you and will happily auto-distribute in December — convenient, but December auto-pilot forfeits all the planning above. Set a November review: confirm amounts, execute QCDs, and decide withholding before the year-end rush.
Inherited IRAs: Different Rules
If you inherited the account, stop — the Uniform Lifetime Table generally does not apply to you. Under SECURE, most non-spouse beneficiaries face the 10-year rule (empty the account within 10 years, with annual RMDs in years 1–9 if the deceased was already taking them). Spouses get special options including treating it as their own. Inherited RMD math is its own maze; this calculator covers your own accounts.
State Taxes on RMDs: The Second Bill
Federal tax is only half the story — most states tax RMDs as ordinary income too. A handful of states (including Illinois, Mississippi, and Pennsylvania) exempt retirement income entirely, which makes them quietly popular retirement destinations. Others offer partial exclusions or senior deductions that phase in at certain ages. If you are choosing where to retire, run the state math: a 5% state rate on a $40,000 RMD is $2,000 a year, every year, for moving one border over.
QCDs help at the state level as well, since the distribution never enters your income in most states that follow federal AGI. And if you are considering relocating, establish domicile before the big RMD years — states audit residency claims from high-income movers, so keep the driver's license, voter registration, and day counts clean.
Putting It All Together
Enter your age and last New Year's Eve balance, read this year's number, then study the 10-year curve. If the curve alarms you, the levers are: Roth conversions now, QCDs from 70½, spending traditional dollars before 73, and the still-working exception if it applies. RMDs are not optional, but with a few years of lead time, their tax bite is very negotiable.