The formula to calculate Required Minimum Distribution (RMD) is:
\[ \text{RMD} = \frac{\text{Account Balance as of December 31}}{\text{Life Expectancy Factor}} \]
The Required Minimum Distribution (RMD) calculator helps you determine the minimum amount you must withdraw from your retirement account each year. The RMD is calculated by dividing your account balance as of December 31 of the previous year by your life expectancy factor.
Imagine Farouk turned 72 last year, and his wife is 60. She is the sole beneficiary of his IRA. Farouk's IRA balance as of December 31 of the previous year was $270,000. According to the IRS Joint Life Expectancy Table, Farouk's life expectancy factor is 27. Therefore, his RMD is calculated as follows:
\[ \text{RMD} = \frac{270,000}{27} = 10,000 \]
