RMD Integration

What Are Required Minimum Distributions?

Required Minimum Distributions (RMDs) are mandatory annual withdrawals from tax-deferred retirement accounts (Traditional IRAs, 401(k)s, 403(b)s, and similar plans). The IRS requires these distributions to ensure that tax-deferred savings are eventually taxed as income rather than passed entirely to heirs tax-free.

RMDs are calculated by dividing the account balance as of December 31 of the prior year by a "distribution period" from the IRS Uniform Lifetime Table. The distribution period decreases with age, so the percentage withdrawn increases each year.

SECURE 2.0 Age Thresholds

The age at which RMDs begin has changed multiple times in recent legislation:

• Before 2020: RMDs began at age 70.5
• SECURE Act (2020): Pushed the starting age to 72
• SECURE 2.0 (2023): Pushed the starting age to 73 for those turning 72 after December 31, 2022
• SECURE 2.0 (2033): Will push the starting age to 75 for those turning 74 after December 31, 2032

Lontevis automatically applies the correct starting age based on the retiree's birth year. The first RMD must be taken by April 1 of the year following the year you reach the applicable age (but taking two RMDs in one year -- the delayed first plus the current year -- can push you into a higher tax bracket).

Uniform Lifetime Table (Selected Divisors)

The IRS updated the Uniform Lifetime Table in 2022 to reflect longer life expectancies. Selected divisors:

Note that by age 90, the IRS requires withdrawing over 8% of the account annually. For a $500,000 Traditional IRA, that is $41,000 of mandatory taxable income -- on top of Social Security and any other income.

Penalty for Missed RMDs

The penalty for failing to take an RMD was reduced by SECURE 2.0 from 50% to 25% of the shortfall (and further to 10% if corrected within two years during the correction window). Even at 25%, a missed $40,000 RMD costs $10,000 in penalties. Lontevis flags RMD obligations in the withdrawal plan and includes them as hard constraints in the optimization -- the withdrawal plan will always meet or exceed the RMD floor.

Integration with Withdrawal Strategy

RMDs interact with every other component of the withdrawal plan:

• Tax sequencing: RMDs set a floor on Traditional account withdrawals. If the RMD exceeds the amount the optimizer would otherwise draw from the Traditional account, the excess pushes income into higher brackets.
• Roth conversions: Converting Traditional to Roth before RMDs begin reduces the future RMD base. This is the primary motivation for aggressive pre-RMD Roth conversions.
• Social Security timing: RMDs combined with Social Security can push retirees into the 85% SS taxation threshold ($44,000 MAGI for MFJ), where up to 85% of Social Security benefits become taxable.
• IRMAA: RMD-driven income spikes two years before age 65+ can trigger Medicare premium surcharges.
• Monte Carlo: RMD withdrawals are incorporated into the simulation -- they reduce the portfolio balance faster than discretionary withdrawals alone, potentially increasing ruin probability.

Joint Life Expectancy Table

If your sole beneficiary is a spouse more than 10 years younger, you may use the Joint Life Expectancy Table instead of the Uniform Lifetime Table. This provides longer distribution periods (smaller annual RMDs). Lontevis automatically applies the correct table when spousal age information is provided.

API Endpoint

curl "https://api.lontevis.smarttechinvest.com/v1/rmd-table?\
  birth_year=1960&\
  traditional_balance=750000&\
  spouse_birth_year=1968" \
  -H "X-API-Key: lon_your_api_key_here"

Response Fields

• rmd_start_age -- the age at which RMDs begin based on birth year
• rmd_start_year -- the calendar year of the first RMD
• table -- the applicable table (Uniform Lifetime or Joint Life Expectancy)
• schedule -- year-by-year array with age, distribution period, RMD amount, and cumulative distributions
• first_year_rmd -- the RMD amount for the first required year based on the provided balance
• projected_rmd_income -- projected annual RMD amounts through age 100, assuming 5% annual growth