What Is the Required Minimum Distribution (RMD) for a $500,000 Retirement Account?
Retirees should understand how required minimum distributions (RMD) are calculated.
A required minimum distribution (RMD) is the minimum amount of money that taxpayers must withdraw from their tax-deferred retirement accounts each year. This rule applies to traditional IRAs and 401(k) plans, among other accounts. Individuals who do not take their RMD before the deadline will face a 25% excise tax on the amount not withdrawn, but this penalty can be reduced to 10% if the error is corrected within two years.
The first RMD can be delayed until April 1, but subsequent RMDs must be taken by December 31 of each year. The age at which you must begin taking RMDs depends on your birth date, with individuals turning 73 in 2026 having their first RMD due by April 1, 2027, while those turning 73 in other years face later deadlines. The RMD amount is calculated by dividing the account balance as of December 31 of the previous year by a life expectancy factor from the IRS' Table III (Uniform Lifetime) table.
For instance, Mark, who turns 73 in 2026 and has $500,000 in a traditional 401(k), would need to withdraw $18,868 for his first RMD, which he can postpone until April 1, 2027. His second RMD, due by December 31, 2027, would also be $18,868. Kate, who turns 75 in 2026 and has $250,000 in both a traditional IRA and a traditional 401(k), would need to withdraw $10,163 from each account for her RMDs.
Robert, who also turns 75 in 2026 and has $250,000 in two separate traditional IRAs, can combine the RMD amounts ($20,326) and withdraw the total from one account.
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