What is the RMD Factor for Age 73?
The RMD factor for age 73, used to calculate the Required Minimum Distribution from tax-deferred retirement accounts like traditional IRAs and 401(k)s, is 26.5 according to the IRS Uniform Lifetime Table. This factor represents the IRS's estimate of the account holder's life expectancy and is a key component in determining the minimum withdrawal amount each year.
How to Calculate Your RMD at Age 73
The RMD calculation involves three main pieces of information:
- The value of your retirement account(s) at the end of the previous year (December 31st).
- Your age in the current year.
- The corresponding RMD factor for your age from the IRS Uniform Lifetime Table.
The formula is: RMD = [Prior Year-End Account Balance] / [IRS Life Expectancy Factor for your age]
For example, if a 73-year-old had a $300,000 IRA balance on December 31, 2024, their RMD for 2025 would be $300,000 / 26.5 = $11,320.75. This amount must generally be withdrawn by December 31st of the distribution year, though the very first RMD can be delayed until April 1st of the following year.
Special Circumstances and RMD Factors
While the Uniform Lifetime Table is common, other IRS tables apply in specific situations:
- If your sole beneficiary is your spouse and they are more than 10 years younger, you would use the Joint Life and Last Survivor Expectancy Table, which results in a smaller RMD due to a longer life expectancy factor.
- Beneficiaries of inherited IRAs use the Single Life Expectancy Table, with rules varying based on factors like the date of the original owner's death and the beneficiary's relationship.
Using the correct table is essential. Financial institutions often provide RMD calculators, and consulting a financial advisor is advisable.
Comparison of RMD Factors
Here’s how the RMD factor changes with age, based on the IRS Uniform Lifetime Table:
| Age | RMD Factor | Calculation (Sample $200k Balance) | Withdrawal Percentage | Key Consideration |
|---|---|---|---|---|
| 73 | 26.5 | $200,000 / 26.5 = $7,547 | 3.77% | This is the factor for the typical 73-year-old. |
| 74 | 25.5 | $200,000 / 25.5 = $7,843 | 3.92% | The factor decreases, so the withdrawal amount increases. |
| 75 | 24.6 | $200,000 / 24.6 = $8,130 | 4.07% | As life expectancy shortens, the percentage increases. |
| 80 | 20.2 | $200,000 / 20.2 = $9,901 | 4.90% | The RMD amount continues to rise each year. |
| 85 | 16.0 | $200,000 / 16.0 = $12,500 | 6.25% | A significantly higher percentage of the account must be withdrawn. |
The Importance of Taking Your RMD
Failure to take your RMD by the deadline can result in a penalty. The SECURE 2.0 Act reduced the penalty for a missed RMD to 25% of the amount not distributed, and it can be further reduced to 10% if corrected in a timely manner.
Conclusion
The RMD factor for age 73 for most retirement account holders is 26.5, derived from the IRS Uniform Lifetime Table. This factor is crucial for calculating the required annual withdrawal from tax-deferred accounts. Accurately determining and taking your RMD is vital for complying with IRS regulations and avoiding significant penalties. Remember to consider special rules for spousal beneficiaries and inherited accounts, and seek professional advice when needed.
For more information on RMDs, please refer to the official IRS resources.
IRS Required Minimum Distributions FAQs
Other important RMD considerations
- Deadlines: The first RMD is due by April 1st of the year after you turn 73. Subsequent RMDs are due by December 31st each year.
- Still Working: If you're still employed past age 73 and are not a 5% owner, RMDs from that specific employer's plan might be deferrable until retirement. However, RMDs for other accounts like IRAs still apply.
- Account Aggregation: For IRAs, calculate the RMD for each account separately but you can withdraw the total from one or multiple IRA accounts. This does not apply to 401(k)s and similar employer plans.
