How to Calculate Your Required Minimum Distribution (RMD)

One of the most common questions we hear is: “How do I know how much I need to withdraw for my RMD?”

The IRS provides clear rules for calculating your Required Minimum Distribution (RMD) each year. The good news is—you don’t have to do this math on your own. Custodians like MidAtlantic IRA provide the calculation to you, but it’s still helpful to understand how it works.

The Basic Formula

Your RMD is calculated using this formula:

Prior Year-End Account Balance ÷ Life Expectancy Factor = RMD

Account Balance: Take the fair market value (FMV) of your retirement account as of December 31 of the previous year.
For traditional brokerage accounts, this value is updated automatically.
For self-directed IRAs, the FMV of your alternative assets (such as real estate, private companies, or notes) must be reported by you, the account holder, each year.

⚠️ If your FMVs are not current, your RMD calculation will be incorrect — which could put you at risk for IRS penalties.

Example: If you’re calculating your 2025 RMD, you’ll use your account balance (FMV) as of December 31, 2024.

Life Expectancy Factor: Find your factor on the IRS Uniform Lifetime Table.
This table assigns a number based on your age. For example, at age 73, the factor is 26.5.
Divide: Divide your account balance by your factor. For example: If your account balance is $265,000 and your factor is 26.5, your RMD is $10,000.

The IRS Uniform Lifetime Table

The IRS publishes this table, which most account holders use. Special tables apply if your spouse is more than 10 years younger and is your sole beneficiary.

How MidAtlantic Helps

At MidAtlantic IRA, we calculate your RMD each year and send this information available to you. For self-directed accounts, this calculation depends on the FMVs you provide. Once your FMVs are updated, we use those figures along with IRS guidelines to determine your required withdrawal.

You’ll still need to submit a request to withdraw the funds, but the calculation itself is handled for you — as long as your FMVs are current.

Important Notes

If you own multiple IRAs, you must calculate the RMD for each account, but you can choose to withdraw the total amount from one or a combination of accounts.
Employer plans (like 401(k)s) have different rules — you generally must take the RMD separately from each plan.
The IRS allows penalties of up to 25% of the amount not withdrawn if you miss your RMD, so accuracy and timely reporting of FMVs are key.

Work With Your Advisors

While administrators and custodians calculate your RMD, it’s always smart to talk with your financial advisor or tax advisor about:

How your RMD fits into your overall retirement income plan
The tax impact of withdrawing more than your RMD
Options like Qualified Charitable Distributions (QCDs) to satisfy your RMD in a tax-efficient way

Additional Resources

Bottom line: RMD calculations are straightforward once your account values are up to date. With self-directed IRAs, it’s critical to keep your Fair Market Values current each year — so your RMD is calculated correctly and you stay penalty-free. MidAtlantic IRA does the math for you, but your advisors can help decide when and how to take your RMD in a way that fits your retirement strategy.