Charles Schwab RMD Calculator
Calculate your Required Minimum Distribution (RMD) based on the latest IRS Uniform Lifetime Table for the current tax year.
What is a Required Minimum Distribution (RMD)?
A Required Minimum Distribution (RMD) is the minimum amount you must withdraw from your retirement accounts—such as a traditional IRA, SEP IRA, SIMPLE IRA, or 401(k)—each year once you reach a certain age. The IRS mandates these distributions to ensure that tax-deferred retirement savings are eventually taxed.
For accounts held at Charles Schwab or any other brokerage, the SECURE Act 2.0 has adjusted the beginning age for RMDs. If you turned 72 in 2023 or later, your starting age for RMDs is 73. This calculator uses the IRS Uniform Lifetime Table to determine your distribution factor.
How to Use the Schwab RMD Calculator
To get an accurate estimate, you will need two pieces of information:
- Fair Market Value: The total value of your retirement account as of December 31 of the previous year.
- Your Age: The age you will reach by December 31 of the current year.
If John has a Schwab Traditional IRA with a balance of $400,000 on Dec 31, 2023, and he turns 75 in 2024:
1. IRS Factor for age 75 = 24.6
2. Calculation: $400,000 ÷ 24.6 = $16,260.16
John must withdraw at least $16,260.16 during 2024 to avoid penalties.
Important Deadlines for Schwab Clients
Generally, you must take your RMD by December 31 each year. However, for your very first RMD, you have the option to delay it until April 1 of the year following the year you reach the required age. Note that delaying the first payment means you will have to take two distributions in a single tax year, which could push you into a higher tax bracket.
Penalties for Missing an RMD
The penalty for failing to take the full RMD amount used to be 50% of the shortfall. Under the SECURE Act 2.0, this excise tax has been reduced to 25%, and potentially as low as 10% if corrected in a timely manner. It is crucial to use a reliable calculator or consult with a tax professional to ensure you meet the legal requirements.