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Which Account to Take your RMDs From

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When you’re subject to the Required Minimum Distributions (RMDs) and you have more than one IRA account to take the distributions from, you have a choice to make.  Even though you have to calculate the RMD amount from all of your IRA accounts combined, the IRS provides that you could take the total of all your RMDs from a single account if you wish.

With this provision in mind, you could take all of your RMDs from the smallest account, which would provide you the opportunity to eliminate one of the accounts in your list, thereby simplifying things.  By reducing the number of accounts that you have, you could simplify the calculation of RMDs, estate planning, and just general paperwork.

However, it might not always work to your best interests to reduce the number of accounts that you have.  You may have multiple accounts in order to simplify your estate planning process, so that you can direct each account to a specific beneficiary or class of beneficiaries, for example.

In addition, if you’re hoping to eliminate some of your IRA accounts, you could always combine several IRAs together by rollovers – the end result is essentially the same.

This combination of accounts for RMDs can also be used with 403(b) accounts – if you happen to have several 403(b) accounts from previous employers, you can combine the RMDs and take them all from one account.  This doesn’t work with 401(k) plans, though, and you also cannot combine unlike accounts (IRAs with 403(b)s or 401(k)s) to take the RMDs for the dissimilar accounts.

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