For RMD calculations, the main thing that gets counted is your prior year- end balance in each account that is subject to RMD rules, then divided by the IRS life-expectancy factor for your age. That generally means traditional IRAs, SEP IRAs, SIMPLE IRAs, and pre-tax money in employer plans like a 401(k), but not Roth IRAs while the owner is alive.

What counts

  • The account’s fair market value or year-end balance as of December 31 of the previous year.
  • The IRS distribution factor based on your age and, in some cases, your spouse’s age.
  • Each separate retirement account that is subject to RMD rules, unless you’re allowed to aggregate them under IRS rules.

What does not count

  • Roth IRAs, for the original owner during life.
  • Qualified Roth accounts in a 401(k) or 403(b) while the owner is alive.
  • Amounts already distributed earlier in the year still count toward satisfying the RMD, but they are not added into the year-end balance used for the calculation.

Simple example

If your traditional IRA was worth $500,000 on December 31 last year and your IRS factor is 25.6, your RMD would be about $19,531.

Important nuance

If you took rollovers, transfers, or had year-end corrections, the calculation may need adjustment. For inherited accounts, the rules can be different depending on who inherited the account and when the original owner died.

TL;DR: count the previous December 31 balance of each RMD-eligible account, then divide by the correct IRS life-expectancy factor; exclude Roth accounts for the original owner.