The IRS calculates your RMD by dividing your prior year-end balance by a life expectancy factor, so at 73, a $250,000 account requires roughly $9,434. A QCD lets IRA owners 70½ or older send up to $111,000 directly to charity in 2026, satisfying their RMD while excluding the amount from taxable income. Missing an RMD triggers a 25% excise tax on the shortfall, but correcting it within two years drops the penalty to 10%.
Are you ahead, or behind on retirement? SmartAsset's free tool can match you with a financial advisor in minutes to help you answer that today. Each advisor has been carefully vetted, and must act in your best interests.
Don't waste another minute; learn more here. Once you reach age 73, the IRS requires you to begin taking Required Minimum Distributions (RMDs) from most tax-deferred retirement accounts. These mandatory withdrawals exist so the government can collect taxes on money that has been sheltered from taxation, sometimes for decades.
The rules are precise, the deadlines are firm, and the penalties for getting it wrong are steep. If you are already past 73, or approaching that milestone, understanding exactly how your RMD is calculated is critical. Working through the mechanics with a financial advisor before your first distribution is time well spent.
The IRS calculates your RMD with a two-step formula: start with your total account balance, then divide by a life expectancy factor drawn from one of the agency's published tables. That factor represents the number of years the IRS estimates you will live beyond your current age. It shrinks every year as you grow older, which pushes your required withdrawal gradually higher as a percentage of your remaining balance.
Here's a question most people 5y from retirement can't answer: at your current savings rate, how much do you need, and how long will it actually last? A good advisor can put a date on that in a single meeting. SmartAsset's free quiz matches you with up to three fiduciary advisors serving your area, so you can get YOUR retirement number now (sponsor) __________________________________________ Here is a concrete example.
Extract — continue reading at the source.
