# RMD Calculators and Percentages

#### marko

##### Give me a museum and I'll fill it. (Picasso) Give me a forum ...
My RMDs start in June of next year and I plan to begin monthly withdrawals in January. FWIW, my current withdrawals seem to be more than what my RMD will be....for now.

I ran four different online calculators with the exact numbers and got three different answers. I suspect that differences is the 'portfolio growth' percentage as some had me enter a percent and some didn't. (AARP, Chas Schwab, Fido, Investor.gov)

So, while I plan on using the results of my broker who says they will do the calculation for me, I'm wondering what percent does the IRS use? I'd hate to understate my estimate by not using the growth percentage that they'd expect as eventually my RMD will be more than my current withdrawals.

The IRS table gives you a percentage based on your age. Apply that percentage to your IRA balances at the end of each year and that is your RMD for the next year. "Growth" has nothing to do with it. There is no estimating.

The IRS doesn't use a percent.

The IRS calculates your RMD for any given year based on the total balances of your traditional IRAs on 12/31 of the year prior and your age on your birthday in the given year. You look up your age in the appropriate table at the end of IRS Pub 590-B and it will give you a divisor. You take your traditional IRA total balance, divide it by that divisor and the result is your RMD.

As an example, if you turn 73 next year and you have a \$1M traditional IRA, the divisor from IRS Pub 590-B Table III is 26.5. \$1M / 26.5 = \$37,735.85 is your RMD.

Your brokerage should come up with the same answer to the penny. If they don't I would investigate why.

There are some nuances, particularly if you have a 10-year younger spouse or if it is an inherited IRA, but that's the basic idea.

The IRS table gives you a percentage based on your age. Apply that percentage to your IRA balances at the end of each year and that is your RMD for the next year. "Growth" has nothing to do with it. There is no estimating.
Ok. "Estimated Rate of Return" is required in some of the calculators that I used. I suspect that changes the calculation. I interpreted that as ''portfolio growth"...what should I use then?

Ok. "Estimated Rate of Return" is required in some of the calculators that I used. I suspect that changes the calculation. I interpreted that as ''portfolio growth"...what should I use then?
What problem are you trying to solve? Growth has nothing to do with the current year RMD calculation. For estimating future RMDs you'll need a growth estimate but it's like any other portfolio growth estimate: A complete crap shoot. Use whatever you like.

I have an Excel spreadsheet that does it all for me. I pasted the IRS table into the spreadsheet, and all I have to do is enter the 12/31 balances from the previous year and it automatically calculates my RMD.
I have another spreadsheet that I input on a month to month basis to add up my estimated tax payments, QCD's, and gifts to our sons, and rent payments.
I make sure that total meets or exceeds the required RMD.

What problem are you trying to solve? Growth has nothing to do with the current year RMD calculation. For estimating future RMDs you'll need a growth estimate but it's like any other portfolio growth estimate: A complete crap shoot. Use whatever you like.
Ahhh! So, the estimated rate of return has nothing to do with the current year's payment. So how does changing that rate of return change the amount I'm due in the current year?

Y'know, I'm going to leave this to my accountant.

So how does changing that rate of return change the amount I'm due in the current year?

It doesn't.

ETA: Well, it shouldn't. If you are giving multiple websites the same inputs in terms of your age and portfolio balance and they are giving you different answers for the first year, then at least some of them are wrong.

ETA2: If you post your age as of next June and links to the calculators, we can probably figure out which ones are correct and which ones are wrong. It'd take like 10 minutes. Might even be able to figure out why they're wrong.

ETA3: We'd also need to confirm that it's not an inherited IRA (sounds like it isn't), and whether or not you have a spouse who is both 10 years younger than you who is the sole beneficiary of your IRA (sounds like that isn't the case).

ETA4: What @cathy63 said below, if you're trying to figure out your 2025 RMD now. It's impossible to get anything other than an estimate for the reasons she states.

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Ahhh! So, the estimated rate of return has nothing to do with the current year's payment. So how does changing that rate of return change the amount I'm due in the current year?

Y'know, I'm going to leave this to my accountant.
The problem you have is that it is not possible to know what next year's RMD will be until all your 2024 transactions are settled and all dividends and interest attributable to the 2024 calendar year are received and accounted for. That will be sometime in early January 2025. Until then, every calculation of your 2025 RMDs is an estimate that could change. The reason that the calculators you are using now are asking you for rate of return, growth percentage, or some similar number is because they are trying to figure out what your account balance will be at the end of this year. If you put in a bigger growth rate then you'll get a higher estimated RMD.

Your broker will be able to tell you in January how much your RMD for 2025 is for the accounts they manage. If you have multiple brokers holding IRAs, each one will give you a number for the accounts they handle. If you have an accountant and you give them your December statements for all your retirement accounts, they can also calculate it for you, and their calculation should match the brokers' calculations. But until the December statements are available, all you can get is an estimate and everyone is going to do that math a little differently.

The problem you have is that it is not possible to know what next year's RMD will be until all your 2024 transactions are settled and all dividends and interest attributable to the 2024 calendar year are received and accounted for. That will be sometime in early January 2025. Until then, every calculation of your 2025 RMDs is an estimate that could change. The reason that the calculators you are using now are asking you for rate of return, growth percentage, or some similar number is because they are trying to figure out what your account balance will be at the end of this year. If you put in a bigger growth rate then you'll get a higher estimated RMD.

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Okaaaay!! Once again Cathy63 comes through. Thanks much

As others have said, trying to be too exact about future RMDs is a waste of time.
When New Year's Day comes, you'll be able quickly to compute that year's RMD to the penny.

The next question for some of us is whether to take your entire RMD as Ordinary Income or whether to do partial Qualified Charitable Distributions to reduce your AGI and avoid getting into a higher IRMAA tier...

My RMDs start in June of next year and I plan to begin monthly withdrawals in January. FWIW, my current withdrawals seem to be more than what my RMD will be....for now.

I ran four different online calculators with the exact numbers and got three different answers. I suspect that differences is the 'portfolio growth' percentage as some had me enter a percent and some didn't. (AARP, Chas Schwab, Fido, Investor.gov)

So, while I plan on using the results of my broker who says they will do the calculation for me, I'm wondering what percent does the IRS use? I'd hate to understate my estimate by not using the growth percentage that they'd expect as eventually my RMD will be more than my current withdrawals.

You and others are talking about two different but similar things.

As others have posted, your 2025 RMD will be based on your 12/31/2024 balance divided by the factor from the IRS tables.

But since we are not yet at 12/31/24, if you are looking to estimate your 2025 RMD you have to estimate your 12/31/2024 IRA balance, which means that you have to estimate the growth of the IRA from now until 12/31/2024. Also, that growth might be negative if you have withdrawals planned that you haven't taken yet.

ETA: I see cathy63 beat me to the punch... you would think that I would be used to it by now.

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Just adding to the discussion. The simple way to look at it is that each year your IRS RMD factor goes up, and is based on your balance at year end of the prior year. So there are two variables (IRS factor, and prior year end balance) that affect your RMD amount.

If you have good returns in year 1, your RMD for year 2 (based on year 1 ending balance) might be less than the amount your balance went up in year 1 compared to the start of the year. Or put mathematically, if your year 1 returns are greater than the percentage* of RMD, your account balance is going up even after your RMD withdrawal.

*Percentage is the IRS factor, using the age 73 factor of 26.5 mentioned earlier: 1/26.5 = .00377 or 3.77%. Subsequent years the IRS factor becomes higher. For example when you are 80, the factor is 20.2, or in terms of percentage 1/20.2 = .00495 or 4.95%

If you live to 90, the IRS factor is 12.2 = .00820 or 8.20%. The RMD keeps rising because the IRS wants to try and get their money.

Just adding to the discussion. The simple way to look at it is that each year your IRS RMD factor goes up, and is based on your balance at year end of the prior year. So there are two variables (IRS factor, and prior year end balance) that affect your RMD amount.

If you have good returns in year 1, your RMD for year 2 (based on year 1 ending balance) might be less than the amount your balance went up in year 1 compared to the start of the year. Or put mathematically, if your year 1 returns are greater than the percentage* of RMD, your account balance is going up even after your RMD withdrawal.

*Percentage is the IRS factor, using the age 73 factor of 26.5 mentioned earlier: 1/26.5 = .00377 or 3.77%. Subsequent years the IRS factor becomes higher. For example when you are 80, the factor is 20.2, or in terms of percentage 1/20.2 = .00495 or 4.95%

If you live to 90, the IRS factor is 12.2 = .00820 or 8.20%. The RMD keeps rising because the IRS wants to try and get their money.
Beat me to it on the concept.

If you live to 90, the IRS factor is 12.2 = .00820 or 8.20%. The RMD keeps rising because the IRS wants to try and get their money.
At the age of 120, the divisor is 2. So if you still have \$2.00 left in your IRA, the IRS can only get one of them.

At the age of 120, the divisor is 2. So if you still have \$2.00 left in your IRA, the IRS can only get one of them.
Well, sort of, if you're in the 100% Federal tax bracket...

OP here. Thanks to all. I sometimes don't know how someone as dense as myself got to have so much money.

OP here. Thanks to all. I sometimes don't know how someone as dense as myself got to have so much money.
Well, I suppose luck and good genes could be a major factor...

OP here. Thanks to all. I sometimes don't know how someone as dense as myself got to have so much money.
For me, this Forum's worst investor, I simply say "I have been blessed."

Do I understand correctly that a traditional IRA and a 401(k) are treated separately? I cannot take a year's worth of RMDs out of just the tIRA and I must take some from the 401(k) proportionately?

If so, can I take all of the RMD out of one 401(k) only? The other 401(k) provides a lot of my "play" money in dividends. I'd t-rather not affect the dividend income.

One of my 401(k)'s mandates that if I want to turn it into a tIRA I must do 100% of the amount. What happens when it requires an RMD? Anyone know?

I've still got a few years to go so laws may yet change. Again.

Do I understand correctly that a traditional IRA and a 401(k) are treated separately? I cannot take a year's worth of RMDs out of just the tIRA and I must take some from the 401(k) proportionately?

If so, can I take all of the RMD out of one 401(k) only? The other 401(k) provides a lot of my "play" money in dividends. I'd t-rather not affect the dividend income.

One of my 401(k)'s mandates that if I want to turn it into a tIRA I must do 100% of the amount. What happens when it requires an RMD? Anyone know?

I've still got a few years to go so laws may yet change. Again.
They are NOT treated separately. The RMD is based on your total tIRA + 401K balance. For your tIRA, you can take it from any one account, or take some for each account. For your 401K, you have to take the RMD amount from each of your 401Ks. Thanks to cathy63 for clarifying the IRS definition.

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Do I understand correctly that a traditional IRA and a 401(k) are treated separately? I cannot take a year's worth of RMDs out of just the tIRA and I must take some from the 401(k) proportionately?
Yes, they are treated separately.
If so, can I take all of the RMD out of one 401(k) only? The other 401(k) provides a lot of my "play" money in dividends. I'd t-rather not affect the dividend income.
No. Each 401(k) administrator is required to send you an RMD based on their account balance. If you have multiple accounts, they don't know about each other and don't coordinate withdrawals.

This is different for tIRAs where the RMD is based on the aggregate account value of all your RMDs.
One of my 401(k)'s mandates that if I want to turn it into a tIRA I must do 100% of the amount. What happens when it requires an RMD? Anyone know?
The RMD will be calculated based on the value of all your tIRAs at the end of the prior year.

If you rollover the 401(k) in the year you reach the RMD age or later, then the 401(k) administrator should distribute the RMD prior to sending funds to the IRA custodian.

They are NOT treated separately. The RMD is based on your total tIRA + 401K balance. You can take it from any one account, or take some for each account.
Please see RMD Comparison Chart (IRAs vs. Defined Contribution Plans) | Internal Revenue Service where the IRS explains:
If you have more than one IRA, you must calculate the RMD for each IRA separately each year. However, you may aggregate your RMD amounts for all your IRAs and withdraw the total from one IRA or a portion from each of your IRAs. You do not have to take a separate RMD from each IRA.
If you have more than one defined contribution plan, you must calculate and satisfy your RMDs separately for each plan and withdraw that amount from that plan.
A 401(k) is a defined contribution plan.