Will you be 73 (or older) in 2025? And, do you have any money in a traditional IRA, 401(k), or other workplace retirement account? If you answered yes to both questions, you’ll soon need to take at least some of your money out of these accounts. The IRS requires these withdrawals, and they’re called required minimum distributions, or RMDs.
But how much is the annual RMD? It depends on the account’s previous year-end balance and your age.
Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. See the 10 stocks »
Calculating your RMD
The good news is RMD rules aren’t too heavy-handed as they allow retirees to keep most of their money in a tax-sheltered account in any given year. But for perspective, let’s assume you had $750,000 in your IRA at the end of last year. Here are the RMDs for that account based on your age in 2025.
Age | Distribution Period Factor |
Percentage of IRA’s Year-End Value |
RMD On $750,000 Retirement Account |
---|---|---|---|
73 | 26.5 | 3.77% | $28,301.89 |
75 | 24.6 | 4.07% | $30,487.80 |
80 | 20.2 | 4.95% | $37,128.71 |
85 | 16.0 | 6.25% | $46,875.00 |
90 | 12.2 | 8.20% | $61,475.41 |
95 | 8.9 | 11.24% | $84,269.66 |
Table by author. Calculations based on IRS Uniform Lifetime Tables.
As you can see, a retiree turning 73 years old this year would need to withdraw at least $28,301.89 from their account. That figure is calculated by dividing the account balance by your distribution period factor at 73, which is 26.5. The percentage of your account the annual RMD represents increases with age until reaching 50% if you’re lucky enough to live to 120.
A few other rules to consider
Although your very first RMD can be completed as late as April 1 of the year after you turn 73, all required distributions thereafter should be made by the end of the calendar year to avoid penalties.
There are some exceptions to RMD rules too. Namely, Roth IRA accounts aren’t subject to RMDs. Most people still contributing to a 401(k) plan also don’t need to take withdrawals from that account, even if they’re 73 or older.
The $22,924 Social Security bonus most retirees completely overlook
If you’re like most Americans, you’re a few years (or more) behind on your retirement savings. But a handful of little-known “Social Security secrets” could help ensure a boost in your retirement income. For example: one easy trick could pay you as much as $22,924 more… each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we’re all after. Simply click here to discover how to learn more about these strategies.
View the “Social Security secrets” »
The Motley Fool has a disclosure policy.