The Best RMD Calculators
Find out How Much to Take out of Required Minimum Distribution
You become subject to certain rules regarding required minimum distributions (RMDs) from your retirement accounts when you get older—specifically when you reach age 72. RMDs dictate when you must begin withdrawing money from your retirement savings and in what amounts. They apply to most IRAs, with one exception: Withdrawals are not required from Roth IRAs until after the death of the owner.
These rules might create a bit of a tax snarl as well as other headaches if they catch you off guard, so it's best to be prepared. You can project your future distributions so you'll know about how much you'll have to withdraw each year and plan your retirement accordingly.
RMD calculations vary depending on whether you're taking a current year required distribution or a beneficiary distribution, so you should choose an RMD calculator based on what you want to estimate.
Planning for Your Retirement
You can use Vanguard’s RMD Calculator to estimate your future required distributions when you're putting together your retirement income plan.
The calculator will project your RMDs for all future years when you enter your estimated rate of return. This can be very useful when you're tax planning for retirement because larger distributions that come later on might push you into a higher tax bracket.
Keep in mind that it sometimes doesn't make sense to wait until age 72 to withdraw from your retirement accounts. If your required distributions will be larger, later on, consider a plan where you can withdraw from these accounts at a younger age.
If You're Over Age 70 Now
You don't want to miss an RMD if you're already age 72 because a hefty penalty can apply. It's equal to 50 percent of the amount you were supposed to withdraw. Use FINRA's Required Minimum Distribution Calculator to calculate your current year’s RMD.
You'll need last year's year-end account balance on hand because the formula that determines how much you must withdraw is based on your December 31 balance from the previous year.
It also takes into consideration your year-end age in the year of distribution. If you have multiple IRAs held in different institutions, you can add up the total retirement account balances and take your RMD from just one qualified account. If you have non IRA retirement accounts then RMDs related to those account will need to be taken independent of the total IRA balances. You might want to consider consolidating your accounts to make this process a bit easier each year.
Inherited an IRA
You must follow RMD rules when you inherit retirement accounts as well. For example, although Roth IRAs don't have RMDs for the original account owner, you must take an RMD if you inherit one. Use Bankrate's RMD Calculator to calculate these mandatory distributions.
The rules are slightly different than if it were your own account. You'll need the deceased person's age of death as well as the prior year-end account balance.
The SECURE Act requires the entire balance of a plan participant’s account be distributed within ten years. There is an exception for a surviving spouse, a child who has not reached the age of majority, a disabled or chronically ill person or a person not more than ten years younger than the employee or IRA account owner. The new 10-year rule applies regardless of whether the participant dies before, on, or after, the required beginning date, now age 72.
These RMD rules can be a pain, but they allow you to stretch out inherited accounts and take distributions slowly over your entire life expectancy and this can be a powerful benefit.
When you're planning for your retirement, you might want to evaluate the merits of a plan that lets you delay the start of Social Security to age 70 while withdrawing from retirement accounts earlier for your cash needs. Many taxpayers don't have this type of plan, but it can be more tax-efficient and it can help your retirement money last longer.