Required Minimum
Distributions-Combining Accounts
Combining RMDs Must Be Limited to the Same Type of
Retirement Plan
If you have multiple retirement accounts, you are allowed to
combine and withdraw the multiple RMDs from one retirement account;
however, only RMDs from certain types of retirement plans can
be combined. The following combinations are permitted:
- If you have multiple Traditional IRAs, you may calculate
each IRA's RMD, combine these RMDs, and withdraw the total
amount from one Traditional IRA.
- If you have multiple 403(b) accounts, you may calculate each
403(b)'s RMD, combine all these RMD amounts, and withdraw the
total amount from one 403(b).
- If you have multiple inherited/beneficiary IRAs from the
same decedent, you may choose to combine life-expectancy distributions
for those inherited IRAs and withdraw the total from one inherited
IRA.
You may not combine the RMD amount for different types of
retirement plans. The following are examples of combinations
that are not permitted :
- You may not combine the RMDs for multiple qualified plans.
Each RMD must be withdrawn from the respective qualified plan.
- You may not combine RMD amounts for different types of
plans. For instance, an RMD amount for a 403(b) account may
not be withdrawn from a Traditional IRA or vice versa, and
the RMD for a 403(b) account may not be withdrawn from a qualified
plan.
- RMD amounts for inherited/beneficiary IRAs may not be withdrawn
from Traditional IRAs that you own.
Example
Brian inherited an IRA from his father Tom. The
RMD amount for the inherited IRA is $12,000. Brian has his own
IRA that he funded himself with contributions from eranings and
rollover contributions, and this year the RMD amount for his
own IRA is $20,000. Brian cannot combine the two RMD amounts
and withdraw from only one. Each RMD must be withdrawn from
its respective account because an inherited IRA and a contributory
(or rollover IRA) are considered different types of plans.
In fact, if Brian had inherirted an IRA from his dad and also
from his mom, you may not combine distributions for those inherited
IRAs (similar to the rule for mutiple qualified accounts)
If you err in combining RMD amounts for different types of retirement
plans, an RMD deficiency will result for the retirement plan
from which you withdrew no RMD. For instance, say the RMD for
your qualified plan is $20,000 and the RMD for your Traditional
IRA is $10,000. If you withdraw $30,000 from the Traditional
IRA and make no withdrawal from the qualified plan account, you
will not have satisfied the RMD for your qualified plan account
and will owe the IRS an excise tax amount of $10,000 (50% of
the shortfall).
Aggregation of RMDs
If you participate in more than one qualified plan, your RMD
for each plan must be determined separately, and each applicable
amount must be distributed from the respective plan. RMD amounts
for qualified plans cannot be distributed from IRAs and vice
versa. However, if you own multiple IRAs or multiple 403(b)
amounts, you may aggregate the RMD for all similar plans (Traditional
IRAs or 403(b)) and then take the amount from one account of
each type of plan.
Example
Brian, age 72, has two contributory IRAs and two 403(b)
accounts. Brian also has assets in a ex-employer qualified
plan and a 401k plan with a past employer. The RMD amount for
each of Brian's retirement accounts is the following:
IRA No.1 -$15,000
IRA No.2 - $8,000
403(b) No.1 - $6,000
403(b) No.2 - $4,500
Profit sharing account - $10,000
401(k) account - $12,000
Here are Brian's options for his various accounts:
- For IRA No.1 and IRA No.2, Brian may either
distribute the amount from each IRA or total the amount and
distribute it from one IRA.
- For 403(b) No.1 and 403(b) No.2, Brian may either distribute
the amount from each 403(b) account or total the amount and
distribute it from one 403(b) account.
- The amount of $10,000 must be distributed from the profit
sharing plan account and the amount of $4,500 must be distributed
from the 401(k) account. These amounts cannot be combined.
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