A worked example
A $500,000 balance with a factor of 26.5 gives a required distribution of $18,867.92.
The balance is last December's, not today's
Market moves during the year do not change the requirement, which is why a falling market can make the withdrawal feel steep.
The factor comes from an IRS table
It falls as you age, so the same balance produces a larger required withdrawal each successive year.
Missing one is expensive
A shortfall attracts an excise penalty on the amount not taken, though it can be reduced where the failure is corrected promptly.
Each account is calculated separately
IRAs can generally be aggregated and drawn from one of them, but employer plans usually cannot.
Roth accounts follow different rules
Roth IRAs have no lifetime requirement for the original owner, which is one reason conversions are considered before the start age.
Withdrawals are taxable income
They land on top of everything else, so a large one can push other income into a higher bracket or affect Medicare premiums.
You can always take more
This is a floor, not a ceiling, but the excess does not count towards next year's requirement.
Inherited accounts have their own regime
Beneficiary rules changed substantially in recent years and depend on who inherited and when.
A quick sensitivity check
Raise account balance by 10%, from $500,000 to $550,000, and the result moves from $18,867.92 to $20,754.72, a change of +10.0%. It marks the input worth verifying first.
Confirm your factor and start age
Both have been revised by legislation more than once. IRS publications and your plan administrator are the authorities. Many account holders check today's balance, when the requirement is calculated on the balance at the close of the previous December. The divisor falls as age rises, so an unchanged balance produces a larger required withdrawal with each passing year. A shortfall attracts an excise charge on the amount not taken, though prompt correction can reduce it substantially. Individual retirement accounts can generally be aggregated and drawn from one of them, while employer plans usually cannot. Roth individual retirement accounts carry no lifetime requirement for the original owner, which shapes conversion decisions. Withdrawals land on top of all other income, so a large one can lift a taxpayer into a higher bracket or affect premiums. Taking more than the minimum is permitted, but the excess never counts towards the following year's requirement. Beneficiary rules were rewritten in recent years and depend heavily on who inherited the account and when. Both the divisor table and the age at which requirements begin have been revised by legislation more than once in recent years. Publications from the tax authority and the plan administrator remain the definitive sources for the current year. Planning the withdrawal early in the year avoids the December rush and the errors that come with it. Coordinating the amount with other income can keep a household below a bracket or premium threshold. Confirming both the divisor and the starting age against current publications matters more here than in most retirement calculations, because both have moved recently.