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When it comes to required minimum distributions, or RMDs, from retirement accounts, the rules have changed a bit in recent years. For a long time, the RMD age was 70 1/2 years old, but it now stands at 73.
If you turned 73 in 2024, you must take your first RMD by April 1, 2025. Subsequent RMDs are due by the end of each calendar year. For example, if you’re 80 years old, you’ll need to take one RMD by Dec. 31, 2024, another by Dec. 31, 2025, and so on.
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RMD rules apply to all employer-sponsored retirement plans, including 401(k)s, 403(b)s, and 457(b)s, as well as pre-tax IRA accounts such as traditional IRAs. The notable exemptions are Roth accounts, while the owner is still alive (RMDs are required from inherited Roth accounts in most cases).
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How much is your RMD if you have $1 million?
The method for calculating your RMD is rather simple: You start by taking your account balance as of Dec. 31 of the previous year and divide that amount by the appropriate life expectancy factor in IRS-published tables.
Most people use the Uniform Lifetime Table to calculate their RMDs. The exception is if your spouse is the sole beneficiary of your account, and they are more than 10 years younger than you.
To illustrate this, we’ll say that you qualify to use the Uniform Lifetime Table. Your ending balance on Dec. 31, 2024, is $1 million, and you turn 77 years old in 2025. The life expectancy factor from the IRS table is 22.9. So, dividing $1 million by 22.9 shows a RMD of $43,668, which must be taken by Dec. 31, 2025.
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