What Is an RMD Calculator?

A required minimum distribution (RMD) calculator is used to determine an individual's distributions for retirement plans, noting the amount that an individual who is 70 1/2 years of age or older is required to withdrawal from an IRA account for the year. The RMD needs to be re-calculated each year and begins on April 1 the year after the retirement account holder turns 70 1/2 -years-old.

In order to determine the amount required to take out that will be subsequently taxed, the account balance from the previous year is divided by a distribution period as stated on a table of life expectancy created by the IRS.

These tables are available through the agency's website, but brokers and financial advisers normally provide resources through Web portals that people can use to make the calculation. The tool asks for account details, the holder's and beneficiary's date of birth.

Factors such as change in marital status, change in beneficiary's age and the death of an account holder are also likely to charge the amount of the distribution, according to the Financial Industry Regulatory Authority. If a beneficiary is 10 years younger than the account owner, then the IRS's Joint Life Expectancy table needs to be used to adjust the required minimum distribution. After the initial pay out, account holders are required to take out the minimum sum by December 31 of the year in question.