SECURE 2.0 increased the Required Minimum Distribution age to 73. Master the December 31 balance calculations and life expectancy divisors to stay fully compliant.
The SECURE Act 2.0 pushed back the starting age for Required Minimum Distributions (RMDs) to age 73 for savers turning 72 on or after January 1, 2023. Understanding how the IRS calculates your mandatory distribution is essential to avoid penalties.
1. The RMD Formula and Uniform Lifetime Table
To calculate your RMD, take the fair market value of all your traditional IRAs on December 31 of the prior calendar year, and divide that total by your life expectancy factor found in IRS Publication 590-B (Uniform Lifetime Table III). For example, at age 73, the divisor is 26.5.
2. Aggregation vs. Individual Account Drawdowns
The IRS allows you to calculate RMDs separately for each traditional IRA you own, aggregate the dollar amounts, and withdraw the total from any one or combination of your traditional IRAs. However, 401(k) and 403(b) accounts must satisfy RMDs individually from each specific plan.
Disclaimer: Roth IRAs have zero RMDs during the original account owner's lifetime.