IRA Mistakes on RMD #2

IRA Rules
One of the benefits of an IRA is that RMDs for multiple IRA accounts can be aggregated. This includes SEP and Simple IRA accounts. The RMD should be calculated for each account separately, but after that , the RMD amounts can be added together and taken from any one or combination of accounts.

403(b) Accounts
A similar aggregation rule exists for 403(b) accounts. A person with more than one 403(b) account can calculate the RMD for each account and then add the RMDs together. The total amount can then be taken from one or a combination of 403(b) accounts.

Employer Plans
RMDs from employer plans, not including 403(b) plans , SEP, and Simple IRAs, CANNOT be aggregated. A person with multiple 401(k), Government 457(b) or other employer plans must calculate the RMD for each individual plan and take that RMD from that plan only.

Roth IRAs
There is no need to worry about whether Roth IRAs can be consolidated because Roth IRAs have NO RMDs during the account owners lifetime.

Other
Any plan making a series of substantially equal payments over a period of 10 years or more, or over life expectancy, cannot aggregate that payment with the RMD from any other retirement account. The distribution from the account making these substantially equal payments is considered the RMD from that account only.

Next blog will show what happens when you get the aggregation wrong!

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