When Do Distributions Start?
Prior to the SECURE Act of 2019, minimum distribution requirements would come into play when an owner of a qualified retirement plan reaches age 70-1/2 before July 1st. If the owner turns 70-1/2 after June 30th, the required minimum distributions wouldn't start until the owner reaches age 71.
With the passage of the Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019, IRA owners who turn age 70-1/2 after December 31, 2019, won't need to start making required minimum distributions until the year they reach age 72.
In other words, if you were born on or before June 30, 1949, the age remains 70 1/2. Otherwise, if you were born after 6/30/1949, then your first RMD will be for the year you reach age 72.
In either case, IRA owners can defer the withdrawal for the first year of the distribution to the following year (for tax purposes), but you must make the withdrawal before April 1st. After that, you must make the withdrawals before December 31st. The penalty for insufficient distributions is 50% of the undistributed amount.
Minimum Distribution Formula
To calculate the amount of your required minimum distribution, you first need to look up your life expectancy factor in the IRS life expectancy tables. Once you find your life expectancy factor, you then divide the year-end balance of your IRA by that factor. The result is the amount you are required to withdraw from your IRA by the end of the current year (or April 15th of the following year if this is your first year of making required withdrawals).
IRS Life Expectancy Tables
IRS Life Expectancy Tables are three tables provided by IRS Publication 590-B for determining minimum distribution requirements for qualified retirement plans. The three tables are Single, Joint Life and Last Survivor, and Uniform Lifetime.
How the IRA RMD Calculator Works
The IRA RMD calculator is based on Table II (Joint Life and Last Survivor Expectancy) and Table III (Uniform Lifetime) Table from IRS Publication 590-B (2021) (opens new window).
If your spouse is the sole beneficiary and is more than ten years younger than you, you will use Table II. If you are unmarried or your spouse is not more than ten years younger than you, or your spouse is not your sole beneficiary, you will use Table III. In either case, the calculated results will indicate which table the calculator used.