Be careful with multiple RMDs! The basic aggregation rules are as follows:

Article for reference:

● IRAs (including SEP and SIMPLE IRAs) – RMDs for each IRA account must be calculated separately, but the total RMD for all IRA accounts may be taken from one (or more) IRA.

● Company Plans [excluding 403(b) and IRA-based Plans] – RMDs for each company plan [excluding 403(b) and IRA-based plans like a SEP or SIMPLE] must be calculated separately for each plan and taken separately from each plan.

● 403(b) Plans – RMDs for each 403(b) account must be calculated separately, but the total RMD for all 403(b) accounts may be taken from one (or more) of the 403(b) accounts.

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Be careful with multiple RMDs. Do you know how to manage RMDs smartly?

As you approach retirement age, it’s important to be aware of Required Minimum Distributions (RMDs). These are mandatory withdrawals that individuals above a certain age must take from their retirement accounts, such as 401(k)s and IRAs. Failing to comply with RMD rules can result in significant penalties, so it’s essential to manage your RMDs smartly.

One aspect of RMDs that can catch some retirees off guard is dealing with multiple accounts. Many individuals may have multiple retirement accounts with different financial institutions or have switched jobs throughout their careers, resulting in various accounts. Each account will have its own RMD requirements, which means you need to be cautious.

Managing multiple RMDs can be overwhelming, but here are a few tips to help you navigate this process smartly:

1. Understand the rules: Firstly, familiarize yourself with RMD rules, which vary depending on the type of account and your age. Generally, RMDs must begin by April 1 of the year following the year you turn 72 if you were born on or after July 1, 1949. For those born before July 1, 1949, the age to begin RMDs is 70 ½. However, if you are still working and have a 401(k) with your current employer, you may qualify for a delayed RMD.

2. Consolidate your accounts: Consider consolidating your retirement accounts to make managing RMDs more straightforward. By rolling over your various accounts into a single IRA, you’ll only have to calculate and take one RMD each year.

3. Seek professional advice: RMD rules can be complex and subject to frequent changes, so it’s worth consulting with a financial advisor or tax professional for guidance. They can help you navigate the intricacies of RMD calculations and ensure you’re in compliance with all regulations.

4. Plan ahead: Don’t wait until the last minute to start managing your RMDs. Keep track of your accounts and their respective RMD requirements to avoid any unexpected surprises. Planning ahead allows you to strategize on the most tax-efficient way to withdraw your funds and meet your financial goals in retirement.

5. Automate withdrawals: Once you determine your RMD amount, consider setting up automatic withdrawals to ensure you don’t miss any deadlines. Some financial institutions offer this service, allowing you to transfer the required amount directly to your bank account or another designated investment account.

6. Reinvest your RMDs: If you don’t need the full amount of your RMD for living expenses, consider reinvesting the remaining funds to let them continue growing tax-deferred. By utilizing a taxable brokerage account, you can maintain your investment portfolio’s growth potential while still abiding by RMD rules.

Remember, RMDs are not optional but a mandatory requirement of retirement accounts. Failing to take your RMDs can result in a hefty penalty of up to 50% of the amount you were supposed to withdraw. Managing multiple RMDs effectively requires knowledge, organization, and careful planning. By understanding the rules, seeking professional advice, and staying on top of your accounts, you can ensure a smoother and smarter approach to managing your RMDs.