How to Calculate RMD: Simple Steps for Retirees

[Ben Graham]

Executive summary: Your required minimum distribution (RMD) equals last year’s December 31 account balance divided by an IRS life-expectancy factor. The real skill is picking the correct factor, applying the rules for each account type, and timing withdrawals to limit taxes and Medicare surcharges. This guide shows you how to calculate RMD accurately, avoid common mistakes, and use smart tactics (including options for gold IRAs) so you can withdraw with confidence.

How to Calculate RMD in Five Clear Steps

Step 1: Confirm that an RMD applies this year

For most people, RMDs start in the year you turn 73 (born 1951–1959). The starting age rises to 75 for those who reach age 74 after December 31, 2032. You may delay only your first RMD until April 1 of the year after your first RMD year; all later RMDs are due by December 31 of each applicable year.

However, delaying can force two taxable withdrawals in one calendar year. That bunching may push you into a higher tax bracket or trigger larger Medicare premiums (IRMAA). A quick projection before you delay can spare you that headache.

Roth IRAs have no lifetime RMDs for the original owner, and designated Roth accounts in 401(k)/403(b) plans are also exempt from lifetime RMDs for 2024 and later. Beneficiaries, special plan provisions, and the “still-working” exception can change the timing, so verify your situation before moving any money.

Still working? If you’re employed and don’t own more than 5% of the company sponsoring your current 401(k), your plan may let you delay RMDs from that plan until retirement. Plan documents control this exception, and it never applies to IRAs.

Step 2: Find your December 31 balance for each account

Your RMD is based on the fair-market value shown on December 31 of the prior year. Pull that figure for each IRA and each employer plan. Each employer plan (such as a 401(k), 403(b), or governmental 457(b)) must be satisfied separately; you can’t take one plan’s RMD from another plan.

If you hold several traditional IRAs, calculate each IRA’s RMD separately, then take the combined total from any one (or several) of your IRAs. Employer plans such as 401(k) and 457(b) must be satisfied separately by plan. Meanwhile, 403(b) contracts can be aggregated only with your other 403(b)s.

Step 3: Select the correct life-expectancy factor

Most people use the IRS Uniform Lifetime Table. If your spouse is more than 10 years younger and your sole beneficiary, you may use the Joint and Last Survivor Table, which gives a larger factor and therefore a smaller RMD. Picking the right table keeps the math and the taxes on target.

Age (this year)	Distribution period (factor)	Approx. % of balance
73	26.5	3.77%
74	25.5	3.92%
75	24.6	4.07%
76	23.7	4.22%
77	22.9	4.37%
78	22.0	4.55%
79	21.1	4.74%
80	20.2	4.95%

These are common starting-age factors from the Uniform Lifetime Table. Your exact factor depends on your age today and, when eligible, the Joint table if a much younger spouse is your sole beneficiary.

Step 4: Do the math (with two quick examples)

The formula is simple: RMD = December 31 balance ÷ life-expectancy factor.

Example A: You turned 73 this year. Your traditional IRA showed $500,000 on last December 31. Using factor 26.5, your RMD is $500,000 ÷ 26.5 = $18,867.92.

Example B: You are 76 with a $1,200,000 prior-year 401(k) balance. Using factor 23.7, your RMD equals $50,632.91. Because this is a 401(k), the withdrawal must come from that plan, not from an IRA.

Step 5: Plan the timing to avoid surprises

Your first-year RMD can be taken as late as April 1 of the following year. Every later RMD is due by December 31. Delaying the first one may bunch two distributions into a single tax year.

Therefore, coordinate timing with wages, capital gains, Roth conversions, and Social Security. A little planning now can prevent an unpleasant tax surprise later.

Special Rules That Can Change Your Calculation

IRAs vs. employer plans: aggregation rules

• Traditional IRAs (including SEP and SIMPLE): Calculate each IRA’s RMD separately, then you may take the total from any combination of your IRAs.
• 403(b) plans: You may aggregate among your own 403(b) contracts. However, 403(b)s can’t be combined with IRAs or 401(k)s for RMD purposes.
• 401(k) and 457(b): Each plan must be satisfied separately. You can’t take one plan’s RMD from a different plan.

Roth accounts and beneficiary nuances

Roth IRAs have no lifetime RMDs for the original owner. In 401(k) and 403(b) plans, designated Roth accounts are not subject to lifetime RMDs beginning in 2024. Inherited accounts follow different rules.

Most non-spouse beneficiaries of accounts inherited after 2019 must empty the account by the end of the 10th year. If the original owner died on or after their required beginning date, annual distributions may also be required in years 1–9 unless the beneficiary is an eligible designated beneficiary.

The “still-working” exception (employer plans only)

If you’re still employed by the plan sponsor and you aren’t a 5% owner, your current plan might let you delay RMDs until retirement. This is plan-dependent and never applies to IRAs. Always confirm with HR or the plan administrator before relying on the exception.

How to Calculate RMD for a Gold IRA

If you hold IRS-approved precious metals in a self-directed IRA, the math is identical: divide the December 31 fair-market value by your life-expectancy factor. You can satisfy the RMD in two ways:

• Cash distribution: Your custodian sells enough metal to generate the required cash amount.
• In-kind distribution: The custodian retitles specific coins or bars into your personal name. The taxable amount is the metal’s fair-market value on the distribution date.

While metals remain inside the IRA, they must be held by an IRS-approved trustee or custodian (for example, a bank or approved depository). Personal storage by the owner isn’t permitted. Taking personal possession of IRA metals before a proper distribution is treated as a taxable IRA distribution and generally triggers a 10% additional tax if you’re under age 59½, unless an exception applies.

Many investors meet their IRA RMD using cash from another IRA and leave the gold position intact. Others prefer in-kind transfers to build personal ownership of specific coins while still satisfying the RMD dollar amount. Either way, the calculation doesn’t change.

Ways to Reduce the Tax Bite of RMDs

Use Qualified Charitable Distributions (QCDs)

Beginning the day you actually reach age 70½, you can send IRA dollars directly to qualified charities as a QCD. These transfers count toward your RMD yet stay out of adjusted gross income, which can help with tax brackets, deductions, and Medicare surcharges.

QCDs must move directly from the IRA custodian to the charity and aren’t available from employer plans. If needed, funds must first be rolled to an IRA before making a QCD.

Avoid the two-in-one-year trap

If you delay your first RMD to the following year (by April 1), you still must take that year’s regular RMD by December 31. Two withdrawals in one year can elevate taxable income, so model the impact before deciding which year to claim the first distribution.

Sequence the right accounts

Because you can aggregate RMDs across traditional IRAs, you have flexibility. Many savers draw from cash-heavy or low-conviction holdings first, preserving favored positions (such as carefully chosen bullion) inside the IRA.

Employer plans don’t allow this flexibility; each plan’s RMD must come from that plan. Knowing that rule ahead of time helps you set expectations.

Coordinate withholding and estimated taxes

RMD withdrawals can include federal and state tax withholding. With IRAs, you can even use a single late-year distribution, with adequate withholding, to cover your full-year estimated tax obligation.

Withholding taken from IRA distributions is generally treated as paid evenly throughout the year for underpayment-penalty purposes. That treatment can reduce or eliminate penalties even if the withholding happens late in the year.

Blend RMDs with Roth Conversions: Do It Carefully

You can’t convert an RMD to a Roth IRA. However, you may take your RMD first and then convert additional amounts from an IRA to a Roth. Because conversions increase taxable income, evaluate brackets, credits, and IRMAA thresholds before you proceed.

Missed RMD? Here’s How to Fix It

If you miss all or part of an RMD, the excise tax is generally 25% of the shortfall. If you correct the shortfall in a timely manner, generally within two years, the excise tax can drop to 10%.

The IRS may waive the penalty entirely for reasonable error when you take the missed amount and file Form 5329 with a clear explanation. Keep statements, confirmations, and correspondence to document the fix.

Inherited Accounts: A Quick Overview

Rules for inherited accounts depend on who the beneficiary is and when the original owner died. Most non-spouse beneficiaries of accounts inherited after 2019 use the 10-year rule.

Eligible designated beneficiaries, i.e., surviving spouses, minor children of the decedent, certain disabled or chronically ill individuals, and individuals who aren’t more than 10 years younger than the decedent, may be allowed life-expectancy payouts. When in doubt, ask the custodian which rule applies and which IRS table, if any, governs the current year.

Frequently Asked Questions

• Which accounts have lifetime RMDs? Traditional, SEP, and SIMPLE IRAs and most employer plans. Roth IRAs have no lifetime RMD for the original owner, and designated Roth accounts in employer plans are also exempt from lifetime RMDs beginning in 2024.
• When are RMDs due? The first-year RMD can be taken by April 1 of the following year; all later RMDs are due by December 31.
• What balance do I use? The December 31 value from the prior year for each account.
• Can I combine RMDs? You may aggregate across your own traditional IRAs; 401(k) and 457(b) plans must each be satisfied separately; 403(b) contracts can be aggregated only with other 403(b)s.
• Which table should I use? Most account owners use the Uniform Lifetime Table; use the Joint and Last Survivor Table if your spouse is more than 10 years younger and is your sole beneficiary.
• How is an in-kind gold distribution taxed? The taxable amount equals the fair-market value of the metal on the distribution date.

Case Study: Strategy Meets Simplicity

Situation: Pat turns 73 in 2025 with two traditional IRAs, a 403(b) from a prior employer, and an active 401(k). One IRA holds diversified funds, and the other is a self-directed gold IRA with IRS-approved bullion.

1. Pat confirms an RMD is required for 2025 (turning 73 in 2025 under current law) and decides not to delay the first RMD to April 1, 2026, to avoid having two distributions taxable in 2026.
2. Pat calculates each IRA’s RMD using the 12/31/2024 balances and the 26.5 factor, then aggregates those IRA RMDs and takes them from the fund-heavy IRA, leaving the gold IRA intact.
3. Pat calculates the 403(b) RMD separately and satisfies it from one of the 403(b) contracts.
4. Pat’s active 401(k) allows the still-working exception, so no 401(k) RMD is due until retirement.
5. To reduce taxes, Pat makes part of the IRA RMD as a Qualified Charitable Distribution, which keeps that amount out of AGI.

Outcome: Pat meets all deadlines, preserves preferred holdings in tax-deferred accounts, and trims the tax impact through QCDs and smart timing.

Checklist: How to Calculate RMD and Get It Right Every Time

• Verify whether an RMD applies this year (age, plan rules, still-working exception).
• Pull each account’s December 31 balance from the prior year.
• Choose the correct IRS life-expectancy table (Uniform or Joint when eligible).
• Compute each account’s RMD; then follow the aggregation rules precisely.
• Select a distribution method (cash or in-kind for metals) and set withholding intentionally.
• Schedule distributions well before year-end (or by April 1 for the first year if you intentionally delay).
• Record confirmations from custodians and keep them with your tax files.

Key Takeaways

• The equation is easy; the inputs matter. Use the correct December 31 balance and the proper IRS factor.
• Aggregation rules differ across IRAs, 403(b)s, and employer plans. Follow them exactly to avoid mistakes.
• First-year timing can create a two-RMD year. Model the tax impact before you delay.
• QCDs can satisfy RMDs while keeping gifts out of AGI and potentially reducing Medicare surcharges.
• Gold IRAs use the same calculation. In-kind distributions are taxed on the asset’s value on the distribution date.

Where This Goes Next

Now that you know how to calculate RMD and plan the timing, shift to strategy. Decide which accounts to tap, whether QCDs fit your giving, and how to preserve favored positions (such as physical gold) inside tax-advantaged accounts. With a few deliberate choices and accurate calculations, how to calculate RMD becomes a steady part of your income plan rather than a source of stress.

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