From 24/7 Wall St. · David Beren · · 1m 20s
Retirees Can Avoid 25% IRS Penalty With IRA RMD Aggregation
Retirees can pull all required minimum distributions from one IRA while leaving others untouched, avoiding costly IRS penalties.
In brief
Retirees can pull all required minimum distributions from one IRA while leaving others untouched, avoiding costly IRS penalties. Retirees can satisfy RMDs from a single IRA without touching other accounts to prevent 25% IRS penalties. Originally reported by 24/7 Wall St..
IRA RMD Aggregation Rule
The IRS allows pulling all required minimum distributions from one traditional IRA while leaving others untouched.
How It Works
Calculate RMDs per IRA using December 31 balances and life expectancy factors, then combine totals from one account.
Why It Matters
Retirees can protect illiquid assets and avoid market timing by pulling obligations from a single cash-heavy account.
401(k) Limitation
401(k) plans do not aggregate RMDs and must pay their own obligations from their own assets.
Inherited IRA Rules
Inherited IRAs only aggregate with other inherited IRAs from the same decedent and within the same type.
25% IRS Penalty
Missing RMDs triggers a 25% excise tax on the shortfall, reducible to 10% with a two-year correction window.
Preparation Steps
List all retirement accounts, group into pools, and calculate RMDs per pool by December 31.
Critical Boundary
Roth IRAs do not have lifetime RMDs, so they do not participate in the aggregation rule.
Here's the gist
Retirees can satisfy RMDs from a single IRA without touching other accounts to prevent 25% IRS penalties.
