Required Minimum Distributions - How they Work

Video tip on Required Minimum Distribution

What are required minimum distributions and how are they determined? Beginning at age 73, you must begin to withdraw money from your retirement accounts every year. The amount is determined based on your life expectancy as contained in the IRS tables. Required minimum distributions are computed by dividing the account balance at year-end by the life expectancy factor. 

Assuming a husband and wife are about the same age, then this factor at age 73 is 26.5 years. Alternatively, you can multiply your account balance by 3.77%, which is 100 divided by 26.5. The first required minimum distribution must be withdrawn by April 1st of the year following the year that you turned 72. Subsequent required minimum distributions must be withdrawn by December 31st each year. Every year, your required minimum distribution will increase over your lifetime. 

If you want an estimate of your required minimum distributions each year, let us do the math for you and help you develop a winning strategy.  

Mike Unterreiner

Financial Legacy Associates

(636) 777-4200

Financial Planning in Missouri