How to Calculate Your RMD if You Have $100,000 in Retirement Savings

For millions of Americans nearing retirement, understanding required minimum distributions (RMDs) is essential to managing their income and avoiding costly penalties. Tax-deferred retirement accounts like 401(k)s and traditional IRAs are valuable tools for saving, but the IRS eventually requires you to start withdrawing funds — ensuring those deferred taxes are finally collected.

That process begins in the year you turn 73, when RMDs become mandatory. And while the concept is simple — you withdraw a minimum amount each year — the calculation behind it depends on a few key factors: your age, your account balance at the end of the previous year, and your life expectancy factor (LEF) set by the IRS.

Understanding How Required Minimum Distributions Work

The main appeal of accounts such as 401(k)s and traditional IRAs is that they let you contribute pre-tax dollars, reducing your taxable income during your working years. In return, you agree to pay taxes later — when you withdraw that money in retirement.

To make sure savers don’t defer taxes indefinitely, the IRS enforces required minimum distributions starting at age 73. These RMDs apply each year and must be taken by December 31. (However, for your first RMD, you can delay the withdrawal until April 1 of the following year — though that would mean taking two RMDs that year, potentially increasing your tax bill.)

Failing to take the required amount results in a steep penalty — 25% of the shortfall. If you correct the mistake within two years, the penalty drops to 10%, but it’s still money you don’t want to lose unnecessarily.

How to Calculate Your RMD

Calculating your RMD is straightforward once you understand the formula. You’ll need two pieces of information:

1. Your account balance on December 31 of the previous year
2. Your life expectancy factor (LEF) from the IRS’s Uniform Lifetime Table

The Uniform Lifetime Table assumes a hypothetical life expectancy and is used by most retirees. The only exception is if your sole beneficiary is a spouse who is more than 10 years younger than you — in that case, you’ll use a separate “Joint Life and Last Survivor” table, which usually results in smaller RMDs.

The formula looks like this:

RMD = Account Balance ÷ Life Expectancy Factor

So, if you had $100,000 in your retirement account at the end of 2024 and you turn 73 in 2025, your life expectancy factor (from the table) is 26.5.
Your RMD for 2025 would be:

$100,000 ÷ 26.5 = $3,774

That’s the minimum amount you must withdraw that year. You can always take more — but doing so may raise your taxable income for that year.

RMDs on a $100,000 Balance: Ages 73–80

To get a better sense of how RMDs change with age, here’s what the required withdrawals look like for someone with a $100,000 balance at the end of 2024:

As you can see, the amount you must withdraw increases slightly each year. That’s because the life expectancy factor decreases as you age, requiring you to draw down your savings more quickly.

Why RMDs Matter for Retirement Planning

RMDs may seem like a small annual detail, but they play a big role in retirement tax strategy and cash flow management. Because these withdrawals are taxable, they can affect your overall income bracket, Medicare premiums, and even the amount of Social Security benefits that are taxed.

Failing to plan ahead may push you into a higher tax bracket — especially if you’re forced to take large withdrawals later in retirement when your account balance is higher.

Financial advisors often suggest starting voluntary withdrawals or Roth conversions in your 60s, before RMDs begin. Doing so can help smooth out your taxable income over time and prevent large, forced withdrawals later.

Managing RMDs Efficiently

There are a few ways to handle RMDs strategically:

1. Withdraw early in the year – You don’t have to wait until December 31. Taking your RMD earlier allows flexibility in managing cash flow and reinvestment.
2. Use qualified charitable distributions (QCDs) – If you’re 70½ or older, you can donate up to $100,000 directly from your IRA to a qualified charity, which counts toward your RMD but isn’t taxed as income.
3. Consolidate accounts – If you have multiple IRAs, you can take the total RMD from one account, simplifying your withdrawals. However, 401(k) RMDs must be taken separately from each employer plan.
4. Reinvest wisely – After withdrawing your RMD, you can reinvest the after-tax portion in a taxable brokerage account to continue growing your savings.

Common RMD Mistakes to Avoid

Even experienced retirees sometimes slip up on RMDs. Here are a few pitfalls to watch for:

• Forgetting inherited accounts: If you inherited an IRA, you may face different withdrawal rules.
• Missing the deadline: The IRS doesn’t send reminders — it’s your responsibility to know when to withdraw.
• Taking the wrong amount: Miscalculations are common, especially when juggling multiple accounts or recent rollovers.
• Assuming Roth IRAs have RMDs: They don’t — only traditional IRAs and similar tax-deferred accounts are subject to these rules.

Avoiding these errors can save you from unnecessary penalties and keep your retirement plan on track.

The Bottom Line

For someone with $100,000 in retirement savings, RMDs begin modestly — around $3,774 at age 73 — but they grow each year as your life expectancy shortens. Understanding how to calculate and plan for them can make a meaningful difference in how long your retirement income lasts.

Knowing your RMD schedule, preparing for the tax implications, and using strategies like Roth conversions or charitable distributions can help you make the most of your savings while staying compliant with IRS rules.

When managed carefully, RMDs don’t have to be a burden — they can be a predictable, tax-efficient part of your broader financial plan.

About the Author

Elias Vennor is a professional writer and editor at EPfortal.com, specializing in Finance and Trending Topics. With a strong background in content research and journalism, Elias Vennor is dedicated to delivering accurate, well-sourced, and timely information to help needy peoples. Their articles follow strict editorial standards, relying on official sources and verified data to ensure credibility. Covering the latest Finance and more related Topics, Elias Vennor aims to make Updated information accessible and easy to understand for all readers.