At age 73, the required minimum distribution works out to roughly 3.77% of your retirement account balance. That figure comes from the IRS Uniform Lifetime Table, which assigns a distribution period of 26.5 years to a 73-year-old. Dividing your prior year-end balance by 26.5 gives the dollar amount you must withdraw, and 1 ÷ 26.5 is where the 3.77% comes from.1IRS. IRS Reminds Retirees of April 1 Deadline for RMDs
How to Run the Calculation
Start with the fair market value of the account as it stood on December 31 of the previous year. That historical balance is what you divide, so market moves during the current year don’t change the amount you owe.2IRS. Retirement Topics — Required Minimum Distributions (RMDs)
Then divide by 26.5. A few worked examples:
- $250,000 ÷ 26.5 = $9,433.96
- $500,000 ÷ 26.5 = $18,867.92
Your year-end statement, whether paper or online, should show the December 31 fair market value you need.3IRS. IRS reminds retirees: April 1 is final day to begin required withdrawals from IRAs and 401(k)s
When a Different Table Applies
The 3.77% figure assumes the Uniform Lifetime Table. If your spouse is your sole beneficiary and is more than 10 years younger than you, you use the Joint Life and Last Survivor Expectancy Table instead, which produces a smaller required withdrawal.4IRS. RMD Comparison Chart – IRAs vs. Defined Contribution Plans
Which Accounts the Percentage Applies To
The 26.5-year divisor is used for the following tax-advantaged accounts:2IRS. Retirement Topics — Required Minimum Distributions (RMDs)
- Traditional IRAs
- SEP IRAs
- SIMPLE IRAs
- 401(k) plans
- 403(b) plans
- 457(b) plans
Roth IRAs require no distributions during the original owner’s lifetime. Under recent changes, designated Roth accounts inside workplace plans (such as a Roth 401(k)) are also generally exempt during the owner’s lifetime. Inherited accounts are a different story: beneficiaries remain subject to distribution rules.2IRS. Retirement Topics — Required Minimum Distributions (RMDs)
If you hold more than one qualifying account, the percentage is calculated separately for each. For multiple IRAs, you can add the amounts together and pull the full sum from a single IRA. For workplace plans like 401(k)s, you generally must take each plan’s amount from that plan, though multiple 403(b) accounts can be aggregated.4IRS. RMD Comparison Chart – IRAs vs. Defined Contribution Plans
Deadlines and the Cost of Missing Them
Your first withdrawal can be delayed until April 1 of the year after you turn 73. Every withdrawal after that must be taken by December 31 of its own year. Using the April 1 delay means two distributions land in the same tax year, which can push up your tax bill.4IRS. RMD Comparison Chart – IRAs vs. Defined Contribution Plans
If you’re still working at age 73, own no more than 5% of the business, and your workplace plan allows it, you can hold off distributions from that plan until April 1 after you actually retire.4IRS. RMD Comparison Chart – IRAs vs. Defined Contribution Plans
If you withdraw less than the required amount, the excise tax is 25% of the shortfall. That drops to 10% if you correct the error and file the required paperwork within the correction window, and the IRS can waive the penalty altogether when the shortfall was due to a reasonable error and you take steps to fix it.5Office of the Law Revision Counsel. 26 U.S.C. § 4974
Is 73 Actually Your Start Age?
The 3.77% figure only matters if 73 is your required beginning age. Federal law sets an applicable age schedule based on your birth year, and people born earlier may have already started under the previous age-70½ or age-72 rules. Check your birth year against the current schedule before you rely on the 26.5-year divisor.
How the Withdrawal Is Taxed
The amount you pull out is generally treated as taxable income. Portions that were already taxed before going into the account, or qualified payouts from designated Roth accounts, are not taxed again.2IRS. Retirement Topics — Required Minimum Distributions (RMDs)