How do i calculate my rmd for 2023
As you plan for retirement, it’s essential to understand the required minimum distributions (RMDs) that you’ll need to take from your retirement accounts once you reach a certain age. In this article, we’ll walk you through the process of calculating your RMD for 2023, using the appropriate IRS guidelines and tables.
Step 1: Determine Your RMD Age
For those who turned 70½ before January 1, 2020, the RMD age remains at 70½. However, if you turned 70½ on or after January 1, 2020, the SECURE Act increased the RMD age to 72. Determine which category applies to you before moving on to the next step.
Step 2: Know Your Account Balance
To calculate your RMD, you’ll need to know your retirement account balance as of December 31, 2022. You can find this information on your account statement or by logging in to your online account with your financial institution.
Step 3: Use the IRS Uniform Lifetime Table
The IRS provides a Uniform Lifetime Table that assigns a distribution period based on your current age. This table can be found in Publication 590-B. Find the distribution period corresponding to your age in the year for which you’re calculating your RMD (in this case, as of December 31, 2023).
Step 4: Calculate Your RMD
Divide your retirement account balance from Step 2 by the distribution period from Step 3. The resulting quotient is your required minimum distribution for the year.
Formula: Account balance (as of December 31, 2022) / Distribution period (from Uniform Lifetime Table) = RMD for 2023
Suppose you’re already at or over the new RMD starting age of 72, and your retirement account balance as of December 31, 2022, is $100,000. According to the Uniform Lifetime Table, the distribution period for a 72-year-old is 25.6 years.
$100,000 / 25.6 = $3,906.25
In this example, your RMD for 2023 would be $3,906.25.
Understanding and calculating your RMD is crucial to ensure that you don’t incur any penalties due to insufficient withdrawals from your retirement accounts. Be sure to consult with a financial advisor or tax professional if you need further assistance with calculating your RMD or planning for your retirement.