Living in Retirement

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Estimate your required minimum distributions in retirement

Once you reach age 70½, you must consider how required minimum distributions (RMDs) fit into your retirement withdrawal strategy. That's because, upon reaching this age, the IRS requires you to withdraw at least a minimum amount each year from all your IRAs and retirement plans—except Roth IRAs—and pay ordinary income taxes on the taxable portion of your withdrawal.

If you don't take withdrawals, or you take less than you should, you'll owe a 50% federal penalty tax on the difference between the amount you withdrew and the amount you should have withdrawn. And you'll still have to withdraw the required amount and pay any income tax due on the taxable amount. To determine how much of your RMD will be taxable, complete Form 8606, available on the IRS website.

The following interactive example can help you estimate your annual RMDs and the remaining balance in your retirement savings over time. Simply enter some basic information about your situation and click Calculate. When you're finished, continue reading about RMDs or learn about our complimentary RMD service.

Estimating your RMDs in retirement

Estimated 2012 RMD amount:
Chart type
Projected RMD amount
Projected balance
Account owner's birthdate
Retirement balance as of
December 31 of last year
Expected annual rate of return
Beneficiary type
Spouse's birthdate

This example is provided for informational purposes only. It assumes your investments will grow at a constant rate each year; in reality, returns will vary. Your spouse's date of birth will only affect the outcome if your spouse is more than ten years younger than you, in which case you'll use a different IRS life expectancy factor table and have a smaller scheduled RMD amount. Vanguard recommends that you consult a financial advisor regarding tax matters.

RMDs simply ensure that the government collects its tax revenue on your retirement savings. You actually have several choices around what to do with your RMD. You can withdraw the RMD amount and spend all of it, withdraw the RMD amount and reinvest some or all of it in a taxable account, or withdraw more than the RMD amount and spend or reinvest it. What you do should be based on your own individual needs—as long as you take at least the minimum withdrawal each year.

How RMDs work

Generally, your RMD for a given year must be withdrawn by December 31 of that year, either in a lump sum or in installments. However, if you're taking an RMD for the first time, you may delay withdrawing the RMD until April 1 of the year after the year you turn age 70½ (or, in some cases, until after the year you retire). If you decide to delay taking your first RMD until the next year, you'll have to take two minimum distributions during that calendar year. This can put you in a higher tax bracket for that year, significantly increasing the tax you owe.

Your RMD amount is determined by applying a life expectancy factor set by the IRS to your account balance at the end of the previous year. To calculate your RMD:

  • Find your age in the IRS Uniform Lifetime Table (below).
  • Locate the corresponding life expectancy factor.
  • Divide your retirement account balance as of December 31 of the prior year by your life expectancy factor.

Note: If your spouse is more than ten years younger than you and is the sole primary beneficiary, you must use the Joint Life and Last Survivor Expectancy Table. You can find this table in IRS Publication 590, which is available on the IRS website.

IRS Uniform Lifetime Table
Your Age Life Expectancy Factor Your Age Life Expectancy Factor
70 27.4 81 17.9
71 26.5 82 17.1
72 25.6 83 16.3
73 24.7 84 15.5
74 23.8 85 14.8
75 22.9 86 14.1
76 22.0 87 13.4
77 21.2 88 12.7
78 20.3 89 12.0
79 19.5 90 11.4
80 18.7
Note: This is an excerpt of the IRS table. For the complete IRS Uniform Lifetime Table, refer to IRS Publication 590, available on the IRS website.

Calculating RMDs for multiple retirement plans

If you have more than one retirement plan, you'll need to calculate the RMD of each plan separately. However, you may add the RMD amounts of all IRAs (including traditional, rollover, SIMPLE, and SEP-IRAs) and withdraw the total amount from any one or more of your IRAs. The same rules apply to 403(b) accounts.

For example, assume that you have three IRAs. Your RMDs are $2,000 from the first IRA; $1,000 from the second IRA; and $1,000 from the third IRA. If you wish, you can take $4,000 from any one or more of your IRAs to satisfy your RMD for the year.

If you have accounts in several 401(k) or other employer-sponsored plans, the IRS generally requires you to calculate a separate RMD for each retirement plan in which you participate and withdraw the appropriate distribution from each plan.

RMDs for IRA beneficiaries

Upon your death, your beneficiaries will have to take their own RMDs based, in most cases, on their own life expectancies under different IRS tables. Under certain circumstances, if a trust is your beneficiary, RMDs may be based on the life expectancy of the oldest trust beneficiary. Charities and estates don't get the benefit of life expectancy distributions. Be aware that beneficiaries of Roth IRAs, in most instances, are required to take RMDs.

For IRAs, if your spouse is the sole primary beneficiary, he or she also has the option of treating the IRA as his or her own and will be able to name new beneficiaries and take RMDs based on the favorable Uniform Lifetime Table. Even if your spouse chooses to remain as the beneficiary of the IRA, rather than becoming the owner, your spouse is eligible for certain benefits not available to other beneficiaries, such as delaying distributions until the year the original owner would have turned 70½.

Get help with your RMDs

Since calculating your RMDs can be complicated, many financial institutions offer to do it for you. If you have retirement accounts with Vanguard, you can take advantage of our complimentary RMD service.

If you have retirement assets at several financial institutions, you can streamline the RMD process by consolidating your assets at one company. This way, you won't have to worry about forgetting to take an RMD from one of your accounts and facing a stiff federal penalty tax. Learn how to transfer your IRA or roll over your 401(k) to Vanguard.

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