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Author: MurrayS Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76384  
Subject: IRAs & RMDs Date: 12/23/2010 9:35 AM
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Posting on a previous thread, I created a spreadsheet to calculate RMDs based on an annual rate of return, an IRA starting value and the table from this link: http://www.bankrate.com/finance/money-guides/ira-minimum-dis...

What is interesting is that the RMD never exceeds 10% of the IRA value at age 70 assuming a 6% return. In other words, if you started out with $500k in an IRA at age 70, the most you would be forced to take out of your IRA is $47,819 at age 94 (see table below).

Personally, I'm lucky enough to be in the 33% marginal tax bracket. With todays tax brackets, I would have to have an IRA value well over $2,000,000 to pay more marginal tax than I would pay to convert to a Roth today. Even then, the average tax paid on the highest RMD would be well below 33%.

Bottom line, I think too much concern is put on RMDs and some end up paying more in taxes to convert traditional IRAs to Roths due to that concern. Of course, tax laws will change in the future and that may be a good reason to convert.

-murray

	Dist			
Age Period RMD % IRA Value RMD
70 27.4 3.65% $500,000 $18,248
71 26.5 3.77% $510,657 $19,270
72 25.6 3.91% $520,870 $20,346
73 24.7 4.05% $530,555 $21,480
74 23.8 4.20% $539,620 $22,673
75 22.9 4.37% $547,963 $23,929
76 22.0 4.55% $555,477 $25,249
77 21.2 4.72% $562,042 $26,511
78 20.3 4.93% $567,662 $27,964
79 19.5 5.13% $572,080 $29,337
80 18.7 5.35% $575,307 $30,765
81 17.9 5.59% $577,215 $32,247
82 17.1 5.85% $577,666 $33,782
83 16.3 6.13% $576,518 $35,369
84 15.5 6.45% $573,617 $37,008
85 14.8 6.76% $568,806 $38,433
86 14.1 7.09% $562,196 $39,872
87 13.4 7.46% $553,663 $41,318
88 12.7 7.87% $543,086 $42,763
89 12.0 8.33% $530,343 $44,195
90 11.4 8.77% $515,316 $45,203
91 10.8 9.26% $498,320 $46,141
92 10.2 9.80% $479,310 $46,991
93 9.6 10.42% $458,258 $47,735
94 9.1 10.99% $435,154 $47,819
95 8.6 11.63% $410,575 $47,741
96 8.1 12.35% $384,604 $47,482
97 7.6 13.16% $357,349 $47,020
98 7.1 14.08% $328,949 $46,331
99 6.7 14.93% $299,575 $44,713
100 6.3 15.87% $270,154 $42,882
101 5.9 16.95% $240,909 $40,832
102 5.5 18.18% $212,082 $38,560
103 5.2 19.23% $183,933 $35,372
104 4.9 20.41% $157,475 $32,138
105 4.5 22.22% $132,857 $29,524
106 4.2 23.81% $109,533 $26,079
107 3.9 25.64% $88,461 $22,682
108 3.7 27.03% $69,726 $18,845
109 3.4 29.41% $53,934 $15,863
110 3.1 32.26% $40,355 $13,018
111 2.9 34.48% $28,978 $9,992
112 2.6 38.46% $20,124 $7,740
113 2.4 41.67% $13,127 $5,470
114 2.1 47.62% $8,117 $3,865
115+ 1.9 52.63% $4,507 $2,372
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