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RMD & Stretch IRA Calculator

The IRS requires that you withdraw at least a minimum amount - known as a Required Minimum Distribution - from your retirement accounts annually; starting the year you turn age 72 (or 70½ if born before 7/1/1949). Use this calculator to help determine how you can stretch out your payments for as long as possible. This calculator has been updated for the 'SECURE Act of 2019 and CARES Act of 2020'.

RMD & Stretch IRA Calculator Definitions

Stretch IRA Strategy
IMPORTANT! This calculator has been updated for the SECURE Act of 2019 and the CARES Act of 2020. The IRS, however, has not yet released procedures for their implementation. Future IRS published procedures may have an impact on enforcement and interpretation of these Acts.

Allowing the beneficiary of a retirement account to stretch out distributions over their lifetime, often referred to as a Stretch IRA, has been significantly impacted by the SECURE Act of 2019. Previously, all beneficiaries had this option. With the new law only designated eligible beneficiaries are allowed this type of minimum distribution. If you are not a designated eligible beneficiary, you have until December 31st of the year that contains the 10th anniversary of the original account owner's death to withdraw all funds from the account. There are no minimum withdrawals during this 10-year period, but all funds must be withdrawn before the deadline to avoid significant penalties. Designated eligible beneficiaries are a surviving spouse, 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.

The CARES Act of 2020 provided a temporary waiver of RMDs. The RMD waiver is for retirement plans and accounts for 2020. RMDs are also waived for IRA owners who turned 70½ in 2019 and were required to take an RMD by April 1, 2020 and have not yet done so.

Even with the SECURE Act of 2019 it is still possible to Stretch your distributions. The strategy assumes that you will take the smallest amount of money from the IRA that the law allows, and at the latest time it allows, without penalty. To accomplish this, we do the following:

If you have your spouse as the beneficiary of the account:

  1. The IRA owner names his/her spouse as sole primary beneficiary of the IRA. While alive, the IRA owner begins taking RMD payments at age 72 (or 70½ if born before 7/1/1949), using a factor from the IRS Uniform Lifetime Table to calculate the distribution (unless the spouse is more than 10 years younger than the owner and is the owner's sole beneficiary).
  2. Upon the death of the IRA owner, the surviving spouse rolls over the funds to his/her own IRA. Any RMD amount that was not taken for the year of death from the deceased spouse's IRA cannot be rolled over. The surviving spouse names a new IRA beneficiary, such as a child, and begins taking RMD at age 72 (or 70½ if born before 7/1/1949) based on the Uniform Lifetime Table.
  3. Upon the surviving spouse's death, beneficiaries have until the end of the year that contains the 10th anniversary of the spouse's death to withdraw all funds. There are no minimum distributions required, but for our illustration we assume distributions happen evenly over the 10 years.

If your beneficiary is not a spouse:

  1. The IRA owner names a beneficiary or beneficiaries of the IRA. While alive, the IRA owner begins taking RMD payments at age 72 (or 70½ if born before 7/1/1949) using the Uniform Distribution Table to calculate the distribution.
  2. Upon the death of the IRA owner, beneficiaries have until the end of the year that contains the 10th anniversary of the original account owner's death to withdraw all funds. There are no minimum distributions required, but for our illustration we assume distributions happen evenly over the 10 years.

The Stretch IRA Strategy is still only for those who do not need their entire IRA to cover their living expenses. The figures created with this calculator are hypothetical and based on current and variable assumptions you selected to help illustrate a concept. Many factors could impact this hypothetical concept, such as possible changes to tax laws in the future, the impact of inflation and other risks. You should consider the effect of inflation on the assets included inside of the IRA, as inflation will erode purchasing power over time. You should remember that assets included inside of the IRA are subject to market risk, including the possible loss of principal. You should consider the fact that tax laws and IRS rules may change over time, potentially limiting the effectiveness of the Stretch IRA strategy.

Owner's birth date
The account owner's birth date. We use this to calculate the account owner's age as well as when minimum distributions are required to take place.
Owner's age at death
This is the age at which you believe the owner of the account will die. Since the IRS uses the age of the account owner as of December 31st of any given year, this is actually the age of the account owner as of December 31st of the year they died.
Previous year end value
This is the fair market value of your account as of the close of business on December 31st of the preceding year. For IRAs, no adjustments are made for contributions or distributions after that date. If you made a transfer or rollover from one account on or before December 31st of the preceding year and the funds were received by a new account in the next year, you will need to increase your December 31st fair market value by the amount that was transferred or rolled over and not included in the December 31 value of either account. This amount may also include the actuarial present value of any additional benefits not reflected in your year-end balance.
Annual rate of return
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 31st 2019, had an annual compounded rate of return of 13.2%, including reinvestment of dividends. From January 1, 1970 to December 31st 2019, the average annual compounded rate of return for the S&P 500®, including reinvestment of dividends, was approximately 10.7% (source: www.standardandpoors.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.

Plan type
Please enter the plan type. The plan type will not affect the calculations, it is used for descriptive purposes only.
Beneficiary birth date
This is the birth date of the account owner's beneficiary.
Is beneficiary a spouse?
Check this box if your only beneficiary is your spouse. The new IRS rules use the Uniform Lifetime Table to calculate all life expectancies for determining a minimum distribution. The only exception to this rule is if the only beneficiary is a spouse and he or she is more than 10 years younger than the account owner. In this situation, the joint life expectancy table is used. The Joint Life expectancy table normally produces lower required distributions. We also use this entry to determine whether to calculate for a spouse's beneficiary's life expectancy.
Beneficiary's age at death
This is the age at which you believe the original beneficiary of the account will die. Like the account owner's age at death, this is actually the age of the beneficiary as of December 31st of the year they died.
Spouse's beneficiary's birth date
If the first beneficiary is a spouse of the original account owner, we use this birth date to determine the life expectancy of the spouse's beneficiary.