A reader writes in, asking:
“This is my first year taking an RMD. I know it’s based on my life expectancy and my IRA balance and I’ve read that I need to combine my IRA balances. Does that include Roths? And does it include my wife’s IRAs? (She isn’t yet RMD age…)”
Firstly, your spouse’s accounts are not included for purposes of calculating your own required minimum distributions. Nor are Roth IRAs included, because non-inherited Roth IRAs do not have required minimum distributions.
Combining Different Types of Accounts
RMDs from non-Roth IRAs can all get bundled together. That is, after calculating the RMD for each of your non-Roth IRAs (including traditional IRAs, rollover IRAs, SEP IRAs, and SIMPLE IRAs), you can then add up all of those RMDs and take that total RMD from any combination of those accounts.
Employer-sponsored defined contribution plans — such as a 401(k) — work differently than IRAs. With them, you must calculate your RMD from each plan and take it from that plan. (Exception: If you have multiple 403(b) plans, you can combine the RMDs from those plans and take it from either of the 403(b) plans — much like you can do with IRAs.)
Let’s Look at an Example
Betty is 72 years old and married. She has a traditional IRA and Roth IRA at Vanguard. She also has a rollover IRA at Fidelity and a SEP IRA at Schwab. In addition, she has two 401(k) accounts and two 403(b) accounts from previous employers.
- When calculating her RMDs, Betty does not take into account her husband’s accounts. (If he’s reached age 70.5, he’ll be calculating and taking his own RMDs, which, in turn, will not be affected by Betty’s account balances.)
- Betty’s Roth IRA is irrelevant because no RMDs are required from Roth IRAs (unless they’re inherited).
- Betty will calculate RMDs for her traditional IRA at Vanguard, her rollover IRA at Fidelity, and her SEP IRA at Schwab. These RMDs can be combined and taken from any of the three accounts or from some combination of the three.
- Betty will calculate an RMD from her first 401(k) account, and she must take that RMD from that account.
- Betty will calculate an RMD from her second 401(k) account, and she must take that RMD from that account.
- Betty will calculate RMDs from each of her 403(b) accounts. She can then combine those RMDs and take the total RMD from either account, or split it up however she chooses between the two accounts.