December 20, 2011

RMDs for Multiple Retirement Accounts

If you have multiple retirement accounts, you might be able to take the required minimum distribution (RMD) for multiple of those accounts from only one account. This is commonly referred to as RMD aggregation. If you choose to aggregate your RMDs, you must exercise extreme caution, as improper aggregation can result in your withdrawing less than the required amount. If you withdraw less than the required amount, you will owe the IRS a 50% excess accumulation penalty.

  • If you have multiple traditional IRAs, SEP IRAs and SIMPLE IRAs, the RMD for these IRAs can be totaled and taken from one of more of these IRAs
  • If you have multiple 403(b) accounts, the RMD for these 403(b) accounts can be totaled and taken from one of more of these 403(b) accounts
  • RMDs cannot be aggregated for qualified plans, such as pension, 401(k) and profit sharing plans
  • RMDs for an IRA cannot be taken from a 403(b) or vice versa.
  • RMDs for inherited accounts cannot be taken from non-inherited accounts and vice versa.

Case Study 3: Multiple Accounts

Tim has two retirement accounts. His RMD for this year is as follows:

  • Traditional IRA : $10,000
  • 403(b) : $10,000

Total $20,000

Tim took a distribution of $20,000 from his 403(b) account by his RMD deadline. He did not make any withdrawals from his IRA by his RMD deadline.

Even though Tim withdrew $20,000, he owes the IRS an excess accumulation penalty of $5,000 (50% of the RMD for the traditional IRA), because he did not satisfy the RMD for the IRA (withdrawals from a 403(b) cannot be used toward satisfying RMD for an IRA and vice versa).

This is just a high level overview. There are more rules to consider.

Tip provided by Denise Appleby

Written By

Retirement Dictionary Staff

Frequently Asked Questions Regarding


Many small business owners and plan participants who either sponsor or participate in SEP or SIMPLE IRA plans question whether or not contributions can be made to these plans after the owner or participant reaches age 72. The answer is yes. In fact, participants turning 72 must be allowed to continue participating. This means that participants must continue to share in employer contributions and, in the case of SIMPLE IRA plans, must be allowed to continue to make salary reduction contributions. The contributions to both SEP and SIMPLE IRA plans are made to IRAs traditional IRAs in the case of SEPs. Note that individuals age 72 or older are not permitted to make the regular, annual contributions ($5,000 for 2011 or $6,000 if age 50 or older) to traditional IRAs, whether or not the IRA is part of a SEP plan. (See Code §219.)

Keep in mind that individuals are still required to take RMDs from these accounts, since all IRA owners must start taking RMDs once they have attained age 72. Pub 560, Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans) Pub 590, Individual Retirement Arrangements (IRAs)

*******This Q&A was taken from the IRS’s Summer 2008 Employee Plan Newsletter ******Update to make current with limits


It appears so. The key statement in your question is “…when I completed the distribution request form”. Regardless of the instructions you provide on the form, your transaction is treated as a distribution and therefore reportable[1], because you completed a distribution request, instead of a request to complete a transfer. IRA Custodians usually provide separate forms for these transactions, and, in many cases, the distribution form will include a reminder that using it will result in the transaction being reported to the IRS.

What You Should Do

You have two options

1. Leave the transaction as is. In this case, you will need to follow up with Custodian B and ensure that they treat the receipt of the funds as a rollover contribution. A rollover contribution is reported on IRS Form 5498 and will serve to offset the distribution reported on the 1099-R. Your tax preparer will need to report the amount as a nontaxable distribution on your tax return. This is accomplished by following the instructions for reporting a rollover on line 15a on 1040 or line 11a on Form 1040-A.

Caution: This option is available only if you have not done a rollover of a distribution from a traditional IRA or Roth IRA within 12-months before the distribution being discussed was made.

2. Ask the Custodians of both traditional IRAs to treat the transaction as a transfer. They may be amenable to doing so, since you did not take possession of the funds. However, bear in mind that they are not obligated to honor your request. In fact, if you already completed a rollover contribution form with Custodian B, instructing them to treat the amount as a rollover contribution, they may be unwilling to make any adjustments as designating an amount as a rollover contribution is usually is usually an irrevocable designation. If they both agree to treat the transaction as a transfer, Custodian A will need to correct the 1099-R reporting, to ensure that the amount is not reported as a distribution, and – in this case, the amount would not be reported on your tax return.

For future reference, please ensure that the correct forms are completed for the transactions you request. Many IRA related errors occur when the wrong forms are completed.

[1] Required to be reported to you and the IRS on form 1099-R


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