3. Calculating Your IRA RMD
The amount you are required to withdraw depends on your life expectancy and the balance of your IRA as of December 31 of the previous year. To calculate your RMD, you divide the year-end balance of your IRA by your life expectancy factor, which is provided by the IRS. The IRS publishes life expectancy tables, which can be found on their website. An example is shown below:
IRA Balance = $100,000
Life Expectancy Factor (age 73) = 26.5
RMD = $100,000 ÷ 26.5 = $3,774
As you can see, your RMD is a fraction of your IRA balance and will increase as you age. If your IRA balance grows, your RMD will also increase, which can significantly impact your tax burden. But don’t worry, there are strategies to manage this burden, which we will cover later in this article.
Hi there! I am Sudip Sengupta, the face behind “Tfin Career”. Tfin Career is a sole proprietorship finance and consulting firm that makes complex tax and financial concepts easy to understand for everyone. With more than 21 years of experience in the field, I have noticed that people cannot make the right decisions in this field. So, I decided to create “Tfin Career” to help individuals and businesses alike. Here I urge those who are confused to make better choices. Also, it is good news for my dear clients and every visitor that I/we are going to start a training module for those who want to choose a career path in Finance and Taxation. Just follow my website.
Thank you for reading this post, don't forget to subscribe!
