Beneficiary Required Minimum Distributions (RMD) - Eligible Designated Beneficiary

Beneficiary Required Minimum Distributions (RMD) - Eligible Designated Beneficiary Definitions

Calculation notes

IMPORTANT! Use these results only if 1) the original account died before 1/1/2020 and was not a spouse or 2) for non-spouse Eligible Designated Beneficiaries. which include a child of the account owner (but generally only until they are 18, at that point the 10 year rule begins) or a chronically ill individual. For more information please see Modification of Required Distribution Rules for Designated Beneficiaries.

This calculator follows the SECURE Act of 2019 Required Minimum Distribution (RMD) rules and the CARES Act of 2020 RMD waiver. If you have questions, please consult with your own tax advisor regarding your specific situation. The CARES Act of 2020 provided a temporary waiver of RMDs for retirement plans and accounts for 2020. This includes direct contribution plans such as 401k, 403b, 457b plans and IRAs. RMDs are also waived for IRA owners who turned 70 1/2 in 2019 and were required to take an RMD by April 1, 2020 and have not yet done so.

This calculator has been updated for SECURE 2.0 of 2022, the SECURE Act of 2019 and the CARES Act of 2020. Future IRS published procedures may have an impact on enforcement and interpretation of these Acts.

A proposed rule for the SECURE Act was released on February 23, 2022. When finalized the new rule will change the way the RMDs are treated for non-spouse Designated Beneficiaries that use the SECURE Act 10-year rule for distributions. It is likely this new rule will be retroactive to all of 2022. Originally the required distributions under the 10-year rule required all funds to be withdrawn end of the year in which includes the 10th anniversary of the account owner's death without regard to RMDs.

The proposed rule requires a beneficiary to withdraw an RMD for year 1 through 9 if the original account owner had already begun taking RMDs themselves. The remainder would then be required to be withdrawn in its entirety in year 10. Note that year's 1 through 9 have a required minimum distribution, any amount over the minimum is acceptable and will not incur penalties.

As of 9/30/2022 the proposed rule has not been finalized. Our current calculator illustrates evenly distributing distributions over a 10-year period when the 10-year rule applies. This will exceed the RMD requirement in all but a few circumstances. The RMD may not be sufficient if the applicable remaining life expectancy of the beneficiary is less than 10 years. It is strongly advised you seek professional guidance in all RMDs and especially with beneficiary RMDs.

Life expectancy calculations

Life expectancy is usually determined using the Single Life Expectancy table and the beneficiary's age on December 31^st of the year following the owner's death. However, if this is not the first year of distribution for the beneficiary, there is an additional step. First, we find the original life expectancy using the Single Life Expectancy table and the beneficiary's age on December 31^st of the year following the owner's death. Then, the current life expectancy is calculated by subtracting one for each year that has passed, from the original life expectancy. Likewise, in all future years, the remaining life expectancy is calculated by subtracting one for each additional year that has passed. It is not allowed to lookup or 'recalculate' a new starting life expectancy after distributions have begun.

If the account owner was younger than the beneficiary, and it was past the required begin date for distributions when the account owner died, the beneficiary can choose to use the account owner's life expectancy to calculate Required Minimum Distributions (RMD). In this special case, the result will always produce a lower RMD. If this situation occurs, this calculator will use the account owner's age when calculating RMDs. Other than using the account owner's age at death, the calculation is identical to the one stated above.

Year of RMD

The year to calculate the Required Minimum Distribution (RMD). This is typically the current year. Change the year to calculate a previous year's RMD.

Beneficiary's name

Please enter the account beneficiary's name.

Name of account

Please enter the name of the account for this analysis.

Beneficiary's birthdate

Enter the beneficiary's birth date. This is used for calculating life expectancy.

Hypothetical Interest rate

This is the expected rate of return on your account. This is only used to help project your future account balances (which of course will impact your required minimum distribution). The actual rate of return is largely dependent on the types of investments you select. The Standard & Poor's 500® (S&P 500®) for the 10 years ending December 31^st 2021, had an annual compounded rate of return of 13.6%, including reinvestment of dividends. From January 1, 1970 to December 31^st 2021, the average annual compounded rate of return for the S&P 500®, including reinvestment of dividends, was approximately 11.3% (source: www.spglobal.com). Since 1970, the highest 12-month return was 61% (June 1982 through June 1983). The lowest 12-month return was -43% (March 2008 to March 2009). Savings accounts at a financial institution may pay as little as 0.25% or less but carry significantly lower risk of loss of principal balances.

It is important to remember that these scenarios are hypothetical and that future rates of return can't be predicted with certainty and that investments that pay higher rates of return are generally subject to higher risk and volatility. The actual rate of return on investments can vary widely over time, especially for long-term investments. This includes the potential loss of principal on your investment. It is not possible to invest directly in an index and the compounded rate of return noted above does not reflect sales charges and other fees that investment funds and/or investment companies may charge.

Amount Subject to RMD

This is the fair market value of your account. For RMD calculations, the amount to use is the balance on December 31^st of the previous year. For example, to determine the RMD for 2020 the account balance on 12/31/2019 would be used.

Date of the original account owner's death

Please enter the date of the original account owner's death.

Plan type

Please enter the plan type. The plan type can affect distributions if the account owner is younger than the beneficiary and RMDs have already begun.

Original account owner's birth date

Please enter the original account owner's birth date.