Question: I have two Individual Retirement Accounts (IRAs) and one 401(k) account from my old employer. I am not presently working. I have to begin taking required minimum distributions since I turned 70 last year. What accounts am I required to draw from in fulfilling my minimum required distribution (“MRD”).
Answer: For qualified plans, the MRD must be calculated separately for each such plan and each plan must distribute the MRD calculated for that plan. For example, if a person participates in two employer based plans, he will receive two separate MRDs (even if all the plans are provided by the same employer).
For IRAs, a different rule applies. The MRD must be calculated separately for each IRA, but generally the participant is not required to take the calculated amount from each IRA. In other words, the individual can add up the MRDs required from all of his IRAs and then take the total amount from one of the IRAs or from any combination of them.
Note: Roth IRAs may not be aggregated with any other type of traditional IRA.
Also, the optional aggregation rule applies as well to 403(b) accounts. That is to say, the MRD must be calculated separately for each 403(b) account, but the individual is not required to take each 403(b) plan’s calculated amount from any one particular account.
As always, if you have any questions or would like to learn more, please let me know.
ABOUT STEVE SHANE
Steve Shane provides strategic counseling to clients in need of estate administration, charitable giving and business continuity planning while minimizing estate, gift, and generation-skipping transfer tax exposure. He offers legal guidance to clients on asset protection and the proper disposition of assets in accordance with the client’s objectives, while employing tax planning techniques such as the use of irrevocable trusts, life insurance planning, lifetime gifts and charitable trust. He is also experienced with drafting documents for business planning, the incorporation and application for exemption for Private Foundations and the administration of decedents’ estates.
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