Key Points
Once you reach the age of 73, the IRS requires you to make minimum annual distributions from non-Roth retirement accounts.
You must calculate your own RMD based on the value of your ordinary IRAs as of the end of the previous calendar year.
There is some flexibility as to how and when you complete your required minimum distribution, but you’ll still want to be smart about utilizing particular options.
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Will you be 73 years old (or older) at any point in 2025? And, do you have any non-Roth IRAs? If your answer to both questions was “yes,” then — if you haven’t yet — you’ll soon be making a taxable withdrawal. The IRS requires it. It’s called a required minimum distribution, or RMD, in fact.
But what’s the minimum on…say $100,000? It depends on your age. The older you are, the more you’re required to withdraw every year. For perspective, here’s the RMD on this amount of money for a range of ages.
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73: $3,773.58
75: $4,065.04
80: $4,950.50
85: $6,250.00
90: $8,196.72
And the number continues rising all the way until you turn 120, at which point your RMD is always 50% of your IRA’s value as of the end of the prior calendar year.
Housekeeping
Your broker or IRA’s custodian can provide you with the information you need to determine your yearly RMD. Just know that it’s your responsibility to initiate the distribution.
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There’s also some flexibility in how you take your RMD. For instance, you might be able to combine the value of multiple retirement accounts yet take your entire required distribution from just one; 401(k) accounts are an exception to this option, though. You’re also allowed to take an in-kind distribution of investments already in your IRA, if you like, rather than taking your RMD in cash. Just be aware that doing so won’t change the taxability of your distribution, which the IRS sees and treats as income.
As for timing, RMDs should be completed by Dec. 31. The one exception is your first one, which doesn’t need to be done until April 1 of the year after you turn 73. You might not want to wait that long, though. Your tax bill comes due for the year the RMD is completed. By waiting, you’ll be making two required taxable distributions in the same tax year, potentially pushing you into a higher tax bracket.
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