How Do You Use a 401(k) Withdrawal Calculator?


Quick Answer

Use a 401(k) withdrawal calculator by entering the balance in the 401(k), your age, the age of your beneficiary and other information to figure the amount of the required minimum distribution for the year. Required minimum distributions are obligatory once a 401(k) account holder reaches the age of 70 1/2.

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Full Answer

Although the first required distribution from a 401(k) account is due at 70 1/2, you can delay it without penalty until April 1 of the following year. However, you must make subsequent withdrawals by December 31 each year. To figure the correct amount to withdraw, enter in the calculator the amount in the 401(k) account on December 31 of the previous year, your age as of December 31 for the year you are calculating the distribution, and check the provided box if your birthday is after June 30, as this impacts whether you begin required distributions when you are 70 or 71 years old. Check the provided box if your spouse is your sole beneficiary, and write in the age of your spouse to determine which IRS uniform table is used to calculate your withdrawal.

Account holders must calculate the required distribution each year based on their current age and the account balance. Although the 401(k) plan administrator may help with distribution calculations, it is the account holder's responsibility to calculate and take distributions. The penalty for not taking distributions when they are due is a tax of 50 percent on the amount of distribution that should have been taken.

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