Required minimum distributions can be confusing

by Mandy Hicks

By Nathan Vinson, Partner
English, Lucas, Priest and Owsley, LLP

Recently, a colleague asked me what I thought was a simple question about the required minimum distributions that those over 70 ½ must take each year from their retirement accounts. In the course of doing the research to answer that question, I discovered it’s not easy to determine exactly how required minimum distributions must be taken.

The question: if you have multiple retirement accounts, can you take a larger required minimum distribution from one account and have it cover that distribution and the required distribution from other accounts?

The answer: it depends on the types of accounts you have.

Required minimum distributions

If you are required to take these, chances are, you know the rules, but here’s a quick summary from the IRS.

“Your required minimum distribution is the minimum amount you must withdraw from your account each year. You generally have to start taking withdrawals from your IRA, SEP IRA, SIMPLE IRA, or retirement plan account when you reach age 70½. Roth IRAs do not require withdrawals until after the death of the owner.”

You can withdraw more than the required minimum, but not less (hence, the name required minimum distribution). Your required minimum distribution will be considered taxable income and must be reported on your tax return.

If you’d like to take a look at how to calculate the distribution, you can find worksheets from the IRS here.

Aggregating distributions

You can aggregate all of your required minimum distributions from Individual Retirement Accounts and take it as a lump-sum out of one account IF all of the accounts are IRAs. This includes SEP and SIMPLE IRAs.

SEP IRAs are used by those who are self-employed as a retirement savings vehicle. SIMPLE (Savings Incentive Match Plan for Employees) IRAs allow both employee and employer to contribute, and are typically used by small employers who don’t have any other type of retirement savings option for employees.

You cannot aggregate if the accounts are employer-sponsored plans that are 401(k)s or 457 plans (typically used by government entities). Required minimum distributions must be taken from each account.  An exception is made for 403(b) plans, which are typically used by non-profits.

Roth IRAs follow the same rules. If you have multiple Roth IRAs, you can combine the required minimum distribution and take it all from one account, so long as all of the accounts are Roth IRAs.

Inherited retirement plans

Nathan Vinson
Nathan Vinson

What if you inherit a retirement plan? You can combine those in the same way, so long as each IRA uses the same life expectancy to calculate the retired minimum distribution.

Keep in mind, too, that IRAs and other retirement savings plans are designed for individuals. You can’t combine your minimum distribution with a spouse’s or an inherited IRA and take all of that from one account, even though they may all feed into your household.

We are here to assist you with tax law matters as well as estate planning, probate, wills and trusts, and much more. Contact me, attorney Nathan Vinson, if I can help you. You can reach me at (270) 781-6500 or