How to Calculate a 401(k) Withdrawal at 70

The IRS requires that all 401(k) participants make annual withdrawals once they reach age 70 1/2. Choosing to take only the required minimum distribution ensures that you pay the minimum tax, but participants may also take more. Calculate your RMD using one of two life expectancy tables and your 401(k) account balance as of December 31 of last year. While many 401(k) plan sponsors will provide this information, it is up to you as the account owner to ensure that it is accurate and that the distribution is withdrawn on time.

Step 1

Choose a life expectancy table. If you are more than 10 years older than your spouse and do not have any other beneficiaries, use the Joint and Last Survivor Table. Otherwise, use the Uniform Life Expectancy Table.

Step 2

Find your life expectancy factor on the appropriate table. If you are using the Joint and Last Survivor Table, find your current age on the left-hand column and your spouse's current age on the top row. Your factor is at the intersection of these two ages within the table. For example, if you are 70 and your spouse is 59, your factor for 2010 is 28.1.

If you are using the Uniform Lifetime Table, your factor is the number beside your age. For 70-year-olds in 2010, this factor is 27.4.

Step 3

Divide your 401(k) account balance by your life expectancy factor to calculate your RMD. For example, a 70-year-old whose spouse is less than 10 years younger and had a balance of $100,000 on Dec. 31 of last year would have an RMD of $100,000 ÷ 27.4 or $3,649.64.

Tip

You may withdraw your RMD in one lump sum, or you may be allowed to withdraw it in monthly or quarterly installments. Consult your plan sponsor for your options.

Your first RMD is not required until Apr. 1 of the year following the year in which you turn 70 1/2. Succeeding distributions must be withdrawn by Dec. 31 each year.

Warning

Failure to withdraw the minimum amount may result in IRS penalties. You must calculate and withdraw a separate RMD for each 401(k) plan and for the total amount of your traditional IRAs.

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