To calculate an IRA withdrawal, start with what kind of withdrawal it is. For a required minimum distribution, divide your December 31 balance from the prior year by the IRS life expectancy factor for your current age. For a discretionary or early withdrawal, the “calculation” is really a tax calculation: the gross amount you take, plus ordinary income tax on it, plus a 10% penalty if you’re under 59½ and no exception applies. Roth IRAs follow a separate set of ordering rules that can make part or all of the withdrawal tax-free. The sections below work through each situation with the actual math.
The RMD Formula
Once you reach age 73, you must begin pulling money from your traditional IRA each year. The formula is one line: prior year December 31 balance divided by the IRS life expectancy factor for your age.
Life expectancy factors live in three tables in IRS Publication 590-B. Most owners use the Uniform Lifetime Table, which assigns a factor based on age alone. At 73, the factor is 26.5. A $500,000 account produces an RMD of $500,000 ÷ 26.5 = $18,868 (rounded up to make sure you clear the minimum).1Internal Revenue Service. Publication 590-B – Distributions from Individual Retirement Arrangements (IRAs)
Two situations use a different table. If your spouse is your sole beneficiary and is more than 10 years younger than you, use the Joint Life and Last Survivor Expectancy Table; the larger divisor produces a smaller required withdrawal. If you’ve inherited an IRA, you generally use the Single Life Expectancy Table, though most non-spouse beneficiaries who inherited after 2019 must empty the account within 10 years under the SECURE Act, which reshapes the calculation into a deadline strategy rather than a lifetime drawdown.1Internal Revenue Service. Publication 590-B – Distributions from Individual Retirement Arrangements (IRAs)
Each year your factor gets smaller, so the percentage of the account you must take grows. An 80-year-old’s divisor is smaller than a 73-year-old’s, and the required distribution is a bigger share of the balance.
When the RMD Is Due and How Multiple Accounts Combine
Your first RMD is due by April 1 of the year after you turn 73. Every RMD after that is due by December 31. Delaying the first one to April 1 stacks two RMDs into a single calendar year and can push you into a higher bracket. Taking the first RMD in the year you turn 73 is usually the better choice.2Internal Revenue Service. Retirement Plan and IRA Required Minimum Distributions FAQs
Starting in 2033, the RMD age moves to 75 under the SECURE 2.0 Act. If you were born in 1960 or later, distributions don’t have to begin until then.3Internal Revenue Service. Retirement Topics – Required Minimum Distributions (RMDs)
Own more than one traditional IRA? You calculate the RMD separately for each account, then you’re allowed to add them together and pull the total from a single IRA if that’s easier. The aggregation rule works only within the same account type. A traditional IRA RMD cannot be satisfied by withdrawing from a 401(k).4Internal Revenue Service. RMD Comparison Chart (IRAs vs. Defined Contribution Plans)
Tax on a Traditional IRA Withdrawal
Every dollar out of a traditional IRA is ordinary income for the year you receive it. What you owe depends on your marginal federal bracket plus any state tax. In the 22% federal bracket with a 5% state tax, roughly 27 cents of every dollar leaves as tax. A $20,000 withdrawal loses about $5,400 that way.
By default your custodian withholds 10% of the taxable amount for federal tax. That’s a prepayment, not a rate. File Form W-4R with your custodian to raise or lower the percentage. If your combined tax rate exceeds 10%, you’ll owe the difference at filing unless you adjust withholding or make estimated payments.5Internal Revenue Service. Pensions and Annuity Withholding
State withholding rules vary. Some states require it on IRA distributions, some make it optional, and states without an income tax don’t withhold. Check your state’s rule with your custodian before setting elections.
Calculating an Early Withdrawal Before 59½
A traditional IRA withdrawal before age 59½ carries a 10% additional tax on top of the regular income tax. On a $20,000 early withdrawal, that’s $2,000. Combined with a 27% effective income tax rate, the total hit reaches $7,400, leaving $12,600 in hand.6Internal Revenue Service. Substantially Equal Periodic Payments
Several exceptions remove the 10% penalty while leaving income tax in place:
- Distributions after you become permanently disabled or receive a terminal diagnosis.
- Up to $10,000 in lifetime IRA withdrawals for a first-time home purchase.
- Qualified education expenses for you, your spouse, or dependents.
- Up to $5,000 per parent within one year of a child’s birth or adoption finalization.
- Unreimbursed medical expenses above 7.5% of adjusted gross income.
- Health insurance premiums during unemployment, after receiving unemployment compensation for at least 12 consecutive weeks.
Claim the exception on Form 5329 with your tax return. The 10% is calculated first, then reduced by the qualifying amount, so keep records of what the money actually paid for.
Roth IRA Withdrawal Math
Roth accounts follow a separate logic because you contributed after-tax dollars. Money leaves in a set order: direct contributions first, then converted amounts, then earnings. That order controls whether you owe anything.
Contributions come out any time, at any age, tax-free and penalty-free. Contributed $50,000 over the years? You can pull up to $50,000 with no tax bill.
Converted amounts come out next. You already paid income tax at conversion, so no income tax applies again. But if you’re under 59½ and withdraw converted amounts within five years of that specific conversion, the 10% early withdrawal penalty can apply. Each conversion runs its own five-year clock.
Earnings come out last. To take earnings tax-free and penalty-free, you must be at least 59½ and the Roth must have been open for at least five years. Miss either condition and earnings are taxed as income, with the 10% penalty possible on top. Roth IRAs have no RMDs during the owner’s lifetime, so there is no mandatory calculation to run.
Penalty if You Miss or Fall Short on an RMD
Miss part or all of an RMD and the excise tax is 25% of the shortfall. If your RMD was $20,000 and you took only $15,000, you owe 25% of the $5,000 gap, or $1,250, plus the regular income tax on the amount when it eventually comes out.7Office of the Law Revision Counsel. 26 U.S.C. 4974 – Excise Tax on Certain Accumulations in Qualified Plans
The 25% drops to 10% if you correct it quickly, meaning you withdraw the missed amount and file the correction during the window that generally runs through the end of the second tax year after the year you missed the RMD. Report the shortfall and claim the reduced rate on Form 5329.7Office of the Law Revision Counsel. 26 U.S.C. 4974 – Excise Tax on Certain Accumulations in Qualified Plans
Regular Withdrawals Before 59½ Without the Penalty
If you need steady access to IRA funds before 59½ and want to skip the 10% penalty, Section 72(t) permits a stream of substantially equal periodic payments (SEPPs). You commit to a fixed payment schedule for the longer of five years or until you reach 59½. Break the schedule early and the 10% penalty applies retroactively to every distribution you took.6Internal Revenue Service. Substantially Equal Periodic Payments
Three calculation methods are approved:
- The required minimum distribution method divides the account balance by a life expectancy factor each year. The payment moves as both balance and divisor change. It produces the smallest of the three payments.
- The fixed amortization method sets a level annual payment by amortizing the balance over your life expectancy at a chosen interest rate. That rate cannot exceed 120% of the federal mid-term rate. The payment stays flat.8Internal Revenue Service. Notice 2022-6 – Determination of Substantially Equal Periodic Payments
- The fixed annuitization method divides the balance by an annuity factor built from an IRS-approved mortality table, using the same 120% interest rate cap. Payment stays flat.8Internal Revenue Service. Notice 2022-6 – Determination of Substantially Equal Periodic Payments
Once a SEPP plan starts, switching methods is very limited. A one-time switch from either fixed method to the RMD method is allowed. The reverse is not.
Reducing the Taxable RMD With a Charitable Transfer
If you’re 70½ or older, you can send up to $111,000 per year (the 2026 inflation-adjusted limit) straight from your IRA to a qualifying charity. A qualified charitable distribution counts toward your RMD and stays out of your taxable income. The transfer has to go directly from custodian to charity. If the money passes through your hands, it’s a regular taxable distribution.
The calculation is straightforward. Reduce the RMD obligation dollar-for-dollar by the QCD, and exclude the same amount from gross income. RMD of $25,000 with a $10,000 QCD leaves $15,000 as the taxable distribution needed to satisfy the rest. For someone who takes the standard deduction and doesn’t itemize, a QCD produces a tax benefit for charitable giving that would otherwise be unavailable.