Calculating Required Minimum Distributions

There are three tables that are used in different situations to calculate your Required Minimum Distributions. The table that applies to your situation will give you a number in which you divide your account balance by to determine your required minimum distribution that year. Your account balance is determined by the value the account was on December 31st of the previous year. For example, if your RMD is in 2019, then you will use the account value from 12/31/2018 in coordination with a table to determine your RMD.

The first table we will look at is the Uniform Lifetime Table. This table is used for the majority of people because it is the table used for calculating RMDs from your own IRA. The table below was taken from IRS Publication 590-B.

Example 1: Assume you use the uniform lifetime table to calculate your RMDs and it gives you a distribution period of 27.4 years because you are 70 when taking your RMD. If you have an account worth $100,000 that is subject to RMDs then the math is as follows: $100,000/27.4 = $3,649.64. Your annual required minimum distribution from that account is $3,649.64.

The second table we will look at is the Single Lifetime Table. This table applies when you have an inherited IRA. When you inherit an IRA as a non-spouse, you must begin taking RMDs over your own life expectancy in the year following the year of passing. Below is part of the table taken from IRS Publication 590-B.

Example 2: Assume you use the Singe Life Expectancy Table to calculate your RMDs and it gives you a distribution period of 40.7 years because you are 43 years old. If you have an account worth $100,000 that is subject to RMDs then the math is as follows: $100,000/40.7 = $2,457.00. Your annual required minimum distribution from that account is $2,457.00.

The third table is the Joint and Last Survivor Table. This table applies to those who have a spouse 10 years or more younger than them. This table will give you a more favorable RMD than the Uniform Lifetime Table. Below is an excerpt of the table taken from IRS Publication 590-B.

Example 3: Assume you use the Joint Life and Last Survivor Table to calculate your RMDs and it gives you a distribution period of 30.9 years because you are age 71 and your spouse is age 55. If you have an account worth $100,000 that is subject to RMDs then the math is as follows: $100,000/30.9 = $3,236.25. Your annual required minimum distribution from that account is $3,236.25.

Your situation will dictate which table is used to calculate the required minimum distribution. Each year, the percentage an owner must take from an account will increase. It is important to work with a CPA if you are not comfortable doing taxes on your own because the penalties for missing an RMD is typically 50% of the RMD not taken.