How to Calculate RMD for 2026 (Step-by-Step Guide)

If you're approaching retirement age or already there, Required Minimum Distributions are one of the most important annual tax obligations to understand. Take too little and you face a steep penalty. Take more than you need and you may push yourself into a higher tax bracket unnecessarily.

This guide explains how RMDs work, walks you through the exact calculation for 2025, and covers the most effective strategies for reducing your tax bill.

Understanding Required Minimum Distributions (RMDs)

A Required Minimum Distribution (RMD) is the minimum amount you must withdraw each year from certain tax-deferred retirement accounts once you reach a specified age. The IRS mandates these withdrawals to ensure that money saved on a tax-deferred basis is eventually taxed.

RMDs apply to the following account types:

• Traditional IRAs
• Simplified Employee Pension (SEP) IRAs
• Savings Incentive Match Plan for Employees (SIMPLE) IRAs
• 401(k) and similar workplace retirement plans
• Inherited IRAs (subject to different rules depending on your relationship to the original account holder)

Roth IRAs are a notable exception. During the original account owner's lifetime, Roth IRAs are not subject to RMD rules. More on that below.

Recent Changes in RMD Age Requirements

The age at which RMDs begin has changed significantly in recent years. Here's where things stand for 2025:

• Before the SECURE Act (pre-2020): RMDs began at age 70½
• SECURE Act (2020): Age raised to 72
• SECURE 2.0 Act (effective 2023): Age raised to 73

If you turn 73 in 2025, your first RMD must be taken by April 1, 2026. All subsequent RMDs are due by December 31 of each year.

Note: If you delay your first RMD to April 1, 2026, you'll take two RMDs in 2026 (one for 2025 and one for 2026), which could meaningfully increase your taxable income for that year. In many cases, taking your first RMD in the year you turn 73 is the better tax move.

Looking further ahead, SECURE 2.0 will raise the RMD starting age to 75 for people born in 1960 or later. That change doesn't take effect until 2033.

Calculating Your RMD for 2025

Your RMD is calculated using two inputs:

1. Your retirement account balance as of December 31, 2024
2. Your IRS life expectancy factor from the Uniform Lifetime Table, based on your age in 2025

The formula is straightforward:

RMD = Prior Year-End Account Balance / Life Expectancy Factor

IRS Uniform Lifetime Table: 2025 Factors

The IRS updated its Uniform Lifetime Table effective January 1, 2022 (Rev. Proc. 2021-31). These updated factors apply for 2025. If you've seen older factors in other resources, those are outdated.

For the complete table covering all ages, refer to IRS Publication 590-B or visit IRS.gov.

Step-by-Step RMD Calculation

• Step 1: Find your account balance as of December 31, 2024. If you have multiple IRAs, add the balances together.
• Step 2: Locate your age in the IRS Uniform Lifetime Table above and note the corresponding life expectancy factor.
• Step 3: Divide your account balance by the life expectancy factor. That's your 2025 RMD.

Worked Example

You are 73 years old in 2025. Your IRA balance on December 31, 2024 was $500,000.

RMD = $500,000 / 26.5 = $18,867.92

You must withdraw at least $18,867.92 from your IRA in 2025.

If you have multiple IRAs, you can calculate the total RMD across all accounts and take the full amount from any one account or split it across accounts however you prefer. For 401(k) plans, you must calculate and take the RMD separately for each plan.

Tax Implications of RMDs

RMDs are taxed as ordinary income. The amount you withdraw gets added to your other income for the year, which can push you into a higher tax bracket if you're not planning for it.

Here's a simple example. If your other income totals $60,000 and your 2025 RMD adds $18,867, your total taxable income becomes roughly $78,867. Depending on your filing status, that could affect your tax rate, Medicare premiums (IRMAA surcharges are based on income from two years prior), and eligibility for certain deductions.

This is why proactive planning before and after RMD age matters. The strategies below can help reduce the bite.

Strategies to Minimize RMD Tax Burdens

RMDs themselves are unavoidable once they begin, but how much tax you pay on them is not fixed. These 5 strategies can meaningfully reduce your RMD tax burden.

1. Roth Conversions

Converting a portion of your traditional IRA or 401(k) into a Roth IRA before you reach RMD age reduces your future RMD obligation. Roth IRAs are not subject to RMDs during the original owner's lifetime, and qualified withdrawals are tax-free.

A gradual conversion strategy, spreading the conversion over several years, allows you to convert at lower tax rates while staying within your current bracket. Work with a tax advisor to find the optimal annual conversion amount for your situation.

2. Qualified Charitable Distributions (QCDs)

If you are 70½ or older and have charitable goals, a Qualified Charitable Distribution lets you transfer money directly from your IRA to a qualified charity. For 2025, the QCD limit is $105,000 per person (up from the original $100,000 limit, now indexed for inflation under SECURE 2.0).

QCDs count toward your RMD requirement. The amount transferred is excluded from your taxable income entirely, which is a better tax outcome than taking the RMD as income and then making a charitable deduction.

Example: Your 2025 RMD is $18,867. You direct that amount to a qualified charity as a QCD. Your taxable RMD income is $0 and you've satisfied your full RMD obligation for the year.

This strategy works especially well for people who don't itemize deductions, since it reduces taxable income directly rather than offsetting it with a deduction.

3. Delay Social Security Benefits

Delaying Social Security benefits until age 70 maximizes your monthly payment and reduces your taxable income in earlier retirement years. Lower income in the years before RMDs begin creates more room for Roth conversions and other tax planning moves. Once RMDs start, the combined income from Social Security and RMDs can be managed more smoothly if you've built up flexibility in advance.

4. Withdraw Strategically Before RMD Age

You can take penalty-free withdrawals from retirement accounts starting at age 59½. Making planned withdrawals before age 73 reduces your account balance, which lowers your future RMDs. This smooths out your taxable income over time rather than concentrating it in later years when RMDs are larger.

This strategy works best when your tax rate in pre-RMD years is similar to or lower than your expected rate once RMDs begin.

5. Tax Diversification

Holding savings across taxable accounts, tax-deferred accounts (traditional IRA, 401(k)), and tax-free accounts (Roth IRA) gives you flexibility to manage your bracket each year. In years when your income is lower, you draw more from tax-deferred accounts. In higher-income years, you lean on tax-free Roth withdrawals. This kind of flexibility becomes increasingly valuable once RMDs introduce a fixed income floor.

Common Pitfalls to Avoid With RMDs

Missing the Deadline

RMDs must be taken by December 31 each year (with the exception of your first RMD, which can be delayed to April 1 of the following year). Missing the deadline results in a penalty of 25% of the amount not withdrawn. If you catch and correct the missed RMD within the correction window, the penalty drops to 10%. These penalties were reduced from the previous 50% rate by SECURE 2.0, effective 2023.

Forgetting Multiple Accounts

If you have multiple IRAs, you calculate the RMD for each separately, but you can take the combined total from any one or combination of those IRAs. For 401(k) plans, the rules are different: you must take the RMD separately from each individual plan. Mixing these rules up is a common and costly mistake.

Not Planning for Tax Withholding

RMD withdrawals don't automatically include tax withholding. If you don't account for the tax owed, you could face a large bill plus underpayment penalties when you file. You can elect to have taxes withheld from your RMD at the time of withdrawal, or make quarterly estimated payments to cover the liability.

Using Outdated IRS Life Expectancy Factors

The IRS updated its Uniform Lifetime Table in 2022. Many calculators and older articles still use the pre-2022 factors, which are lower and produce a higher RMD amount. Using the old table means you'd withdraw more than required and pay unnecessary income tax. Always verify you're using the current table (Rev. Proc. 2021-31, effective January 1, 2022) when calculating your 2025 RMD.

Who Doesn't Need to Take RMDs?

The following accounts are exempt from RMD rules for the original account owner:

• Roth IRAs: No RMDs during the owner's lifetime. Beneficiaries who inherit a Roth IRA are subject to distribution rules.
• Roth 401(k) plans: Effective 2024 under SECURE 2.0, Roth 401(k)s are no longer subject to RMDs during the original owner's lifetime.

If you're still working and participating in your current employer's 401(k), you may be able to delay RMDs from that specific plan until you retire. This exception applies to the current employer's plan only, not to IRAs or 401(k)s from former employers.

Planning for a Financially Secure Retirement

RMDs don't have to be a financial burden. With the right approach, they become a predictable and manageable part of your retirement income strategy.

The most important things to do right now:

• Confirm your December 31, 2024 account balances
• Use the updated 2022 IRS Uniform Lifetime Table factors (not older versions)
• Decide whether a QCD, Roth conversion, or partial pre-RMD withdrawal makes sense for your situation this year
• Plan for taxes on your RMD before you take the withdrawal

If your tax situation is complex, including income from multiple retirement accounts, Social Security, investment income, or an inherited IRA, your 2025 return may take more time to prepare accurately than a straightforward return. That's exactly the situation where filing a tax extension makes sense.

Need More Time to File? A Tax Extension Can Help

RMDs, inherited IRA rules, and multiple account types can make retirement tax returns significantly more complex. If you're not ready to file by the April 15 deadline, filing a tax extension gives you until October 15 to get everything right.

An extension prevents the failure to file penalty, which is the larger of the two late penalties. It doesn't extend your payment deadline, so estimate what you owe and pay that by April 15 to avoid the failure to pay penalty.

TaxExtension.com is an Authorized IRS eFile Provider with a 99% IRS approval rate. The process takes less than 5 minutes.

Frequently Asked Questions

What is the RMD for a $500,000 IRA at age 73 in 2025?

Using the updated IRS Uniform Lifetime Table, the life expectancy factor for age 73 is 26.5. Your RMD would be $500,000 / 26.5 = $18,867.92.

Can I take more than my RMD?

Yes. The RMD is a minimum, not a maximum. You can withdraw as much as you want. Just keep in mind that all withdrawals from traditional IRAs and 401(k)s are taxed as ordinary income, so withdrawing more than required will increase your tax bill for the year.

What happens if I have multiple IRAs?

Calculate each IRA's RMD separately using its individual December 31, 2024 balance and your life expectancy factor. You can then add those amounts together and take the total from any single IRA or split across accounts however you prefer. For 401(k)s, the RMD must be taken from each plan individually.

Does a tax extension affect my RMD?

No. Filing a tax extension changes your return filing deadline, not your RMD deadline. Your 2025 RMD must still be taken by December 31, 2025 (or April 1, 2026 if it's your first RMD). The tax extension only gives you more time to file your return.

Are RMDs from inherited IRAs calculated the same way?

No. Inherited IRAs follow different rules depending on your relationship to the original owner, the original owner's age at death, and when they passed away. Many non-spouse beneficiaries are now subject to the 10-year rule under SECURE 2.0, which requires full distribution of the account within 10 years. Consult a tax advisor or IRS Publication 590-B for inherited IRA rules specific to your situation.