RMDs are back for 2021: What you need to know

How are RMDs calculated?

Calculating RMD amounts can get a bit complicated, which is why we recommend leaving it to the experts. But here’s a high-level overview of how it works.

RMD amounts are determined by looking at the following factors:

  • Your age as of December 31 of the current year and your corresponding life expectancy factor according to the IRS Uniform Lifetime Table or Joint Life and Last Survivor Table if your spouse is your sole beneficiary and more than 10 years younger than you.
  • Your retirement account balance as of December 31 of the previous year, which should be adjusted to include any outstanding rollovers or asset transfers that weren’t in the account at year-end. Note: In this situation, you’ll need to call Vanguard to confirm the value of the outstanding rollover assets that need to be included in your December 31 balance.

For example, let’s say you’ll be age 75 as of December 31, 2021, and your life expectancy factor is 22.9. If the value of your IRA as of December 31, 2020, is $800,000, your RMD would be $34,934.50 ($800,000/22.9).

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