How much do you have to take out?
November 4, 2026
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Show Notes
Eddie and Betty's Conversation
Welcome to The American Retirement Advisor. I'm Betty, Eddie's here with me in the studio today, and we are talking required minimum distributions, which I know sounds like exactly the kind of topic that makes people reach for the remote. But stick with us, because Ian Schaeffer's piece today made me say 'wait, that's it?' at least twice, and I think it's going to do the same for you.
Thanks for having me. And I want to say upfront: this one is genuinely simpler than people think, and also sneakier than people think. Both things at once.
Okay, let's start with the simple part. Because I read the article and the math stopped me cold. How is an RMD actually calculated?
One division. That's it. You take your account balance from December 31st of the prior year, you divide it by a factor from the IRS Uniform Lifetime Table, and whatever comes out is the minimum you have to withdraw that year.
One calculation.
Ian puts it perfectly in the piece: 'the math is one division, the receipt is the long part.' Meaning it's fast, the consequences are what you have to think about.
Okay so walk me through what that looks like in real money. The article uses a million dollar balance as an example.
Right, so at 73, the IRS factor is 26.5. You divide it by 26.5 and you get roughly 37,700 dollars. That's under 4% of your balance.
Which sounds manageable.
It does at 73. Fast forward to 90 and the factor has shrunk to 12.2. Now you're dividing by a much smaller number, and your required withdrawal is over 82,000 dollars. That's more than 8% of the same million.
Wait, so the percentage you have to take out more than doubles between 73 and 90?
That's exactly the pattern Ian points out in the piece. The factor shrinks every year, so the share you must take grows every year. It's not static. It accelerates.
It's like a recipe where someone keeps slowly turning up the heat and you don't notice until you smell something burning.
That is a better analogy than anything I was going to say.
I have my moments. So the full table is in David Schaeffer's guide, listeners can find it there. But the big picture is: starts low, climbs steadily, and by your late eighties it is a significant chunk of your account every single year.
Mandatory, year after year, taxed as ordinary income. Which is, again, why Ian's piece flags that the size of the RMD often isn't the main event. It's what that income triggers. But that's coming later in the series.
Right, we'll get there. But first, there's a wrinkle in who uses which table, right? There's a different table for some people?
One exception. If your spouse is more than ten years younger than you and is the sole beneficiary of the account, a different table applies. It gives you a larger divisor, which means a smaller required withdrawal. The idea is that the money might need to stretch over two lives instead of one.
So if that's your situation, you are not using the standard table.
Correct. And that's exactly the kind of thing where I'd say write it down and ask your advisor, because the rules around which table applies and how the beneficiary designation interacts with it are precise enough that you want someone who knows your specific documents looking at it.
Good note. Okay, now here's where it gets interesting, because I thought an RMD was just one number from one account. And apparently that is not how it works.
This is the part that trips people up most. So let's say you have three traditional IRAs. You calculate the RMD for each one separately, but then you can pull the total from any one of them, or spread it across two, or take it all from the third. The IRA world lets you consolidate and choose.
So you add up what you owe from all your IRAs and then decide which account to tap.
Right. 403(b) accounts work the same way. Calculate each one, combine the total, take it from whichever 403(b) you want.
Okay, and I'm guessing 401(k)s are about to ruin this pleasant arrangement.
They really are. Each 401(k), or any similar workplace plan, has to pay its own RMD. You cannot combine them. The IRA flexibility does not apply.
So if you have a 401(k) from your current job and one from a job you had fifteen years ago and never rolled over, those are two separate calculations and two separate withdrawals.
That's two required distributions. And if you forget one, you've missed an RMD on that account. Which is a problem.
How many people do you think have an old 401(k) floating around somewhere that they've sort of half forgotten about?
More than would like to admit it. And this is why one of the action steps in Ian's piece is to literally list every traditional IRA, every 401(k), every 403(b) you own, with its December 31st balance. Not a mental list. An actual list.
Because the IRS is definitely keeping track even if you aren't.
Yeah, their system is pretty meticulous, let's just say that.
Now there's another rule in the article that I want to make sure people really hear, because I think it surprises a lot of folks. What happens if someone thinks, well, I'll just roll my RMD into a Roth and deal with it that way?
Can't do it. The required amount has to come out first, before anything else moves with that account. You cannot roll an RMD into another retirement account and you cannot convert it to a Roth. It has to leave the retirement system entirely.
So you can't just shuffle it sideways into a different tax-advantaged bucket.
No. The whole point of the RMD is that the government wants that money taxed, and that happens when it comes out as ordinary income. You can't move the required portion into another tax-advantaged account.
Which brings up the obvious question: can you take out more than the minimum?
Always. The RMD is a floor, not a ceiling. Every dollar you take above the minimum is also taxed as ordinary income, but taking more is always allowed.
Sometimes people need to hear that. It's not a maximum, it's a minimum.
That's the floor, not the ceiling. You could withdraw your entire account if you wanted to. You'd just owe tax on all of it.
Please don't do that, but yes, technically true. Now, the IRS tables actually changed somewhat recently. What happened there?
In 2022 the IRS updated them to reflect the fact that people are living longer. Longer expected lifespan means a slightly larger divisor, which means slightly smaller required withdrawals.
So the update was actually good news for retirees?
Slightly good news. The amounts came down a little. It's not dramatic, but it's a real change, and if you're using an old calculator from before 2022 you may be working with outdated numbers.
That is genuinely useful to know. Okay, so here's the thing that has been sitting with me since I read Ian's piece. He says the size of the RMD is often not what does the most damage. What does he mean by that?
So the RMD itself is taxable income. But the article points to the downstream effects: what that added income does to your tax bracket, whether it affects your Medicare premiums, whether it changes how much of your Social Security gets taxed. It's not just the withdrawal, it's the chain reaction the withdrawal sets off.
So you take out 40,000 dollars and suddenly things you thought were settled get unsettled.
And that's what the rest of the series is tackling. Ian's piece says that's where the week is headed, and I'm curious to see it laid out because those interactions are where the real planning work happens.
This is part three of a seven-part series on what the article calls The Hidden History of the Rule That Taxes Your Retirement. David Schaeffer wrote the full guide, and Ian Schaeffer's piece today is walking us through the mechanics of the calculation specifically.
And the action steps in the article are worth doing right now, even if you're years away from 73. You want to know what accounts you have, what their balances are, and which ones can be combined and which ones can't.
Because finding out you forgot a 401(k) from 2007 is not a fun discovery at age 74.
It really isn't.
The article also says you can begin the conversation to run your own numbers alongside your tax professional. That link is in the article.
And I'd add: the combination rules, the table question if you have a much younger spouse, the exact way your specific accounts interact, those are genuinely worth a conversation with an advisor who can look at your actual situation. The general rules in Ian's piece are clear, but the application is personal.
Our team at American Retirement Advisors can walk through the specifics with you. That's what they're there for.
And they've seen plenty of account mixes like yours. Nothing here is exotic, but getting the combination rules wrong is a real and avoidable mistake.
Let me ask you one more thing before we close. If someone comes away from today with just one thing in their head, what do you want it to be?
The percentage grows every year. You don't get a fixed slice of your account. The IRS takes a bigger and bigger share as you age, by design, because the factor shrinks every single year. So the plan you make at 73 is not the plan that gets you to 90.
The heat keeps getting turned up.
Exactly. Plan accordingly.
If today raised questions you haven't sat down and answered with someone yet, that's the move. Get your list of accounts together, get the balances, and bring it to an advisor who can help you see the whole picture. And if you want to go deeper into all of it, the full backstory, where this rule came from and why it works the way it does, David Schaeffer's guide is exactly where to go. Thank you for spending this time with us. We'll see you in the next one.