Key Points
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In general, anyone with a tax-deferred retirement account must take withdrawals called required minimum distributions (RMDs) beginning at age 73.
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RMDs are calculated by dividing the retirement account balance from the prior year by a life expectancy factor (found on an IRS table) based on current age.
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The 2025 RMD for a 73-year-old with $500,000 invested in a traditional IRA as of Dec. 31, 2024, will equal $18,867.92.
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Tax-deferred accounts, like traditional individual retirement accounts (IRAs) and 401(k) plans, let workers delay taxes on qualified distributions, provided they meet income-based eligibility requirements. However, the government will not let you withhold those tax payments indefinitely.
Upon reaching a certain age, individuals with tax-deferred retirement accounts must begin taking required minimum distributions (RMDs), meaning they must withdraw a percentage of the account balance each year. At that point, the contribution and any investment gains are subject to income tax.
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Read on to learn more about RMDs, including when they begin and how to calculate the withdrawal amount for a retirement account with a balance of $500,000.
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Which account types are subject to required minimum distributions (RMDs)?
A required minimum distribution (RMD) is the smallest amount of money that retirees must withdraw from tax-deferred accounts each year. RMD rules apply to account holders and beneficiaries with the following plans:
Importantly, RMD rules do not apply to Roth accounts while the original owner is alive, but beneficiaries of Roth accounts must abide by RMD rules.
In general, account holders must take RMDs by Dec. 31 each year. The only exception is that the first RMD can be postponed until April 1. For instance, anyone who turned 73 in 2025 could delay their first RMD until April 1, 2026. However, all subsequent RMDs must be completed by Dec. 31.
At what age do required minimum distributions (RMDs) begin?
The age at which required minimum distributions begin depends on when you were born. Details are provided in the chart below:
Account Holder’s Birth Date
Age When RMDs Begin
Before July 1, 1949
70 ½
July 1, 1949, to Dec. 31, 1950
72
Jan. 1, 1951, to Dec. 31, 1959
73
After Dec. 31, 1959
75
Data source: Internal Revenue Service. RMDs = required minimum distributions.
Anyone who does not take their RMD before the deadline will be penalized with an excise tax equal to 25% of the amount not withdrawn. The penalty can be reduced to 10% if the error is corrected within two years. The penalty can also be waived if the account holder demonstrates the shortfall was due to a reasonable error. To qualify, the account holder must file a Form 5329 with their tax return and attach a letter of explanation.
How much is the required minimum distribution (RMD) on a $500,000 retirement account?
Required minimum distribution amounts are calculated by dividing a life expectancy factor into the relevant account balance from Dec. 31 of the preceding year. For instance, to calculate RMD amounts due by Dec. 31, 2025, you would use the account balance from Dec. 31, 2024.
Individuals with more than one IRA must calculate the RMD for each account separately, but the total amount can be withdrawn from a single account. However, that rule does not apply to defined contribution plans such as 401(k), 403(b), and profit-sharing plans. The RMDs for those accounts must be calculated and withdrawn separately.
The IRS publishes three life expectancy tables. Which table you use to determine your RMD depends on the circumstances. Beneficiaries use Table I (Single Life Expectancy). Account holders whose spouses are their only beneficiary and at least 10 years younger use Table II (Joint and Last Survivor Life Expectancy). All other account holders use Table III (Uniform Lifetime).
Shown below is an abbreviated reproduction of Table III (Uniform Lifetime) from the IRS.
Age in Current Year
Distribution Period
73
26.5
74
25.5
75
24.6
76
23.7
77
22.9
78
22.0
79
21.1
80
20.2
Data source: Internal Revenue Service. Table III (Uniform Lifetime).
Here is an example: Mark turned 73 in 2025, so he is now subject to RMD rules. Mark had $500,000 invested in a traditional IRA as of Dec. 31, 2024. His RMD amount is calculated as $500,000 divided by 26.5, which equals $18,867.92. As a reminder, because this will be Mark’s first RMD, he can delay the withdrawal until April 1, 2026. But his second RMD must still be completed by Dec. 31, 2026.
Here is another example: Kristie turns 75 in 2025. She had $300,000 in a traditional IRA and $200,000 in a traditional 401(k) as of Dec. 31, 2024. The RMD on her IRA is calculated as $300,000 divided by 24.6, which equals $12,195.12. The RMD on her 401(k) is calculated separately as $200,000 divided by 24.6, which equals $8,130.08.
Here is a final example: James turns 75 in 2025. He had $300,000 in one traditional IRA and $200,000 in another traditional IRA as of Dec. 31, 2024. The RMD amounts will be the same as in the previous example, but James is allowed to combine the sums and withdraw the total (i.e., $20,325.20) from a single account.
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