What Is the Formula for IRA Withdrawals?

If you own an Individual Retirement Account, or IRA, you enjoy tax-advantaged savings intended for retirement. Once you reach the age of 70 1/2, the Internal Revenue Service requires that you begin taking taxable distributions from your IRA. The calculation for how much you must withdraw takes into account both your account value and your life expectancy.

Life Expectancy

Once you reach the age of 70 1/2, you must take IRA distributions at least annually based on your life expectancy. The IRS calculates your life expectancy for IRA distribution purposes in Appendix C of IRS Publication 590. The three tables in Appendix C are the single life expectancy, the joint life and last survivor expectancy, and the uniform lifetime tables. If your spouse is your beneficiary and more than 10 years younger than you, it affects your life expectancy calculation.

Account Value

As your account value rises, so does your required minimum distribution. The IRA uses your account value as of December 31 of the year prior to your distribution as the starting value for the distribution calculation.


Take your account value as of the end of the previous year. All financial services institutions are required to report this value to the IRS at year-end using IRS Form 5498. Calculate your life expectancy using the appropriate table in IRS Publication 590 Appendix C. For example, if you're unmarried or if your spouse is your beneficiary and is less than 10 years younger than you, use Table III. Divide your year-end account value by your life expectancy to arrive at your required minimum distribution. For example, if your year-end account value is $110,000 and you're 76 years old and unmarried, you would divide $100,000 by your IRS-provided life expectancy of 22 years. Your required minimum distribution would be $5,000.

Voluntary Withdrawals

While you're required to use IRS tables to compute your required minimum distribution, if you're taking a voluntary withdrawal, you can take as little or as much of your IRA as you wish. All IRA distributions, even required ones, are taxable at ordinary income tax rates, and if you take a distribution before the age of 59 1/2, you also owe a 10 percent early-withdrawal penalty.

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