rmd for IRAs at multiple institutions

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Skyedancer
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rmd for IRAs at multiple institutions

Post by Skyedancer » Wed Sep 12, 2018 7:39 pm

Just turned 70. I have Traditional IRAs at Fidelity and Vanguard.

Can I take the total RMD amount (Fidelity + Vanguard) from one IRA account at one of the institutions e.g. combined total all from a Vanguard IRA account and none from the Fidelity accounts?

I know I can take the entire MRD from one account at say Vanguard... but I don't know if the same applies to mulitple accounts at mulitple companies.

krow36
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Re: rmd for IRAs at multiple institutions

Post by krow36 » Wed Sep 12, 2018 10:13 pm

If you have more than one IRA, you must calculate the RMD for each IRA separately each year. However, you may aggregate your RMD amounts for all of your IRAs and withdraw the total from one IRA or a portion from each of your IRAs. You do not have to take a separate RMD from each IRA.
https://www.irs.gov/retirement-plans/rm ... tion-plans
If the IRA accounts had to be at the same financial institution, the above IRS policy would say so.

ExitStageLeft
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Re: rmd for IRAs at multiple institutions

Post by ExitStageLeft » Wed Sep 12, 2018 10:27 pm

Welcome to the forum! From the IRS perspective you have one IRA that happens to be split across several companies. They don't care which sliver(s) it comes from, just that the total amount is equal to or greater than your RMD.

Edit to add: You probably would have mentioned if any of these are inherited. Inherited IRAs have their own RMD schedule.

ralph124cf
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Re: rmd for IRAs at multiple institutions

Post by ralph124cf » Wed Sep 12, 2018 11:07 pm

My understanding is that you can also take just one 401(k) distribution if you have multiple 401(k)s. However you cannot take just one distribution that covers both IRAs and 401(k)s.

Also, if you are married, your spouse must also take RMDs, you cannot combine these amounts and take everything from just one account.

I assume that the same applies to 401(a), 403(b) and 457 accounts.

A good reason to roll over to one type of account.

Ralph

kaneohe
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Re: rmd for IRAs at multiple institutions

Post by kaneohe » Thu Sep 13, 2018 2:10 am

ralph124cf wrote:
Wed Sep 12, 2018 11:07 pm
My understanding is that you can also take just one 401(k) distribution if you have multiple 401(k)s.

.......................................
You must take your RMD separately from each 401K...........unlike IRAs.

Spirit Rider
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Re: rmd for IRAs at multiple institutions

Post by Spirit Rider » Thu Sep 13, 2018 8:17 am

kaneohe wrote:
Thu Sep 13, 2018 2:10 am
ralph124cf wrote:
Wed Sep 12, 2018 11:07 pm
My understanding is that you can also take just one 401(k) distribution if you have multiple 401(k)s.
You must take your RMD separately from each 401K...........unlike IRAs.
Correct. You can only aggregate RMDs exclusively within the following categories:
  1. Owned IRA accounts
  2. Inherited IRA accounts from the same beneficiary with the same divisor
  3. 403b accounts

jj
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Re: rmd for IRAs at multiple institutions

Post by jj » Thu Sep 13, 2018 8:29 am

This wasn't part of your question but if you 'only just' turned 70 then you do not turn 70.5 until 2019, so there is no RMD requirement until next year at the earliest.
...it is madness to risk losing what you need in pursuing what you simply desire. Warren E. Buffett

Skyedancer
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Re: rmd for IRAs at multiple institutions

Post by Skyedancer » Mon Sep 17, 2018 4:07 pm

Thanks for the feedback. I previously rolled my 401(k) into an IRA so the accounts would be the same. None are inherited... so I am calculated my RMD based on the total of my IRAs from both institutions. I just needed to confirm the "both institutions" part was correct.

My wife is younger, 70 is a few years off, so my understanding is that she can sit tight for now, but in the year she turns 70.5 she will have to calculate her own RMDs for her IRAs.

ResearchMed
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Re: rmd for IRAs at multiple institutions

Post by ResearchMed » Mon Sep 17, 2018 4:21 pm

Skyedancer wrote:
Mon Sep 17, 2018 4:07 pm
Thanks for the feedback. I previously rolled my 401(k) into an IRA so the accounts would be the same. None are inherited... so I am calculated my RMD based on the total of my IRAs from both institutions. I just needed to confirm the "both institutions" part was correct.

My wife is younger, 70 is a few years off, so my understanding is that she can sit tight for now, but in the year she turns 70.5 she will have to calculate her own RMDs for her IRAs.
To be clear, you don't calculate the combined RMD "based upon the total of [the] IRAs from [all] institutions".
You need to calculate EACH RMD, add them together, and then take that total from one of the IRA's.

It won't vary much, and possibly not at all (and more likely the more separate accounts there are, but still not very much).
However, it could be slightly off, and I don't know if the IRS really checks for that degree of accuracy or not.

RM
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kaneohe
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Re: rmd for IRAs at multiple institutions

Post by kaneohe » Mon Sep 17, 2018 6:02 pm

ResearchMed wrote:
Mon Sep 17, 2018 4:21 pm
Skyedancer wrote:
Mon Sep 17, 2018 4:07 pm
Thanks for the feedback. I previously rolled my 401(k) into an IRA so the accounts would be the same. None are inherited... so I am calculated my RMD based on the total of my IRAs from both institutions. I just needed to confirm the "both institutions" part was correct.

My wife is younger, 70 is a few years off, so my understanding is that she can sit tight for now, but in the year she turns 70.5 she will have to calculate her own RMDs for her IRAs.
To be clear, you don't calculate the combined RMD "based upon the total of [the] IRAs from [all] institutions".
You need to calculate EACH RMD, add them together, and then take that total from one of the IRA's.

It won't vary much, and possibly not at all (and more likely the more separate accounts there are, but still not very much).
However, it could be slightly off, and I don't know if the IRS really checks for that degree of accuracy or not.

RM

Doubt that there's any real difference in the usual case since
(T1 + T2 + ......Tn)/F = (T1/F) + (T2/F) +.........(Tn/F) is algebraic truth.

The difference could come if IRA owner taking RMDs had accounts where spouse was
sole beneficiary and was >10yrs younger and other accounts where this spousal exception was not true
(spouse was not sole beneficiary). Tables for these 2 conditions produce different factors in denominator
so you could not add IRA values first and divide by a single factor F since there would be two factors F1 & F2
depending on beneficiary situation.

ResearchMed
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Re: rmd for IRAs at multiple institutions

Post by ResearchMed » Mon Sep 17, 2018 6:19 pm

kaneohe wrote:
Mon Sep 17, 2018 6:02 pm
ResearchMed wrote:
Mon Sep 17, 2018 4:21 pm
Skyedancer wrote:
Mon Sep 17, 2018 4:07 pm
Thanks for the feedback. I previously rolled my 401(k) into an IRA so the accounts would be the same. None are inherited... so I am calculated my RMD based on the total of my IRAs from both institutions. I just needed to confirm the "both institutions" part was correct.

My wife is younger, 70 is a few years off, so my understanding is that she can sit tight for now, but in the year she turns 70.5 she will have to calculate her own RMDs for her IRAs.
To be clear, you don't calculate the combined RMD "based upon the total of [the] IRAs from [all] institutions".
You need to calculate EACH RMD, add them together, and then take that total from one of the IRA's.

It won't vary much, and possibly not at all (and more likely the more separate accounts there are, but still not very much).
However, it could be slightly off, and I don't know if the IRS really checks for that degree of accuracy or not.

RM

Doubt that there's any real difference in the usual case since
(T1 + T2 + ......Tn)/F = (T1/F) + (T2/F) +.........(Tn/F) is algebraic truth.

The difference could come if IRA owner taking RMDs had accounts where spouse was
sole beneficiary and was >10yrs younger and other accounts where this spousal exception was not true
(spouse was not sole beneficiary). Tables for these 2 conditions produce different factors in denominator
so you could not add IRA values first and divide by a single factor F since there would be two factors F1 & F2
depending on beneficiary situation.
I think the problem isn't as you present it, because there is no rounding "error" in your example.
You aren't needing to round to nearest cent or dollar.
That's why the issue could/would be very slight.

All I know is that's the way the instructions we've seen describe it.
But as I also wrote, given there wouldn't be a meaningful difference if there were any rounding error, would the IRS even notice or bother if they did? That's what I've wondered.

RM
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kaneohe
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Re: rmd for IRAs at multiple institutions

Post by kaneohe » Mon Sep 17, 2018 6:35 pm

RM.....I'm basically agreeing w/ you in the usual case. I'm sure IRS has bigger fish to fry than if you're off 1,2,3 bucks.
I just wanted to mention as I did in previous post that the reason IRS might word it the way it does......... add the individual RMDS.......not add the account values and divide by a factor......in the general case, the owner might have a spouse > 10 yrs. younger who is sole beneficiary of one IRA but not the sole beneficiary of another IRA. In that case you would have to calculate the RMDs separately since the denominators are different for the 2 IRAs and then add the RMDs. You could not add the IRA values first and divide by a single number since there are 2.
(T1/F1) + (T2/F2) not equal to (T1+T2)/?

ResearchMed
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Re: rmd for IRAs at multiple institutions

Post by ResearchMed » Mon Sep 17, 2018 6:42 pm

kaneohe wrote:
Mon Sep 17, 2018 6:35 pm
RM.....I'm basically agreeing w/ you in the usual case. I'm sure IRS has bigger fish to fry than if you're off 1,2,3 bucks.
I just wanted to mention as I did in previous post that the reason IRS might word it the way it does......... add the individual RMDS.......not add the account values and divide by a factor......in the general case, the owner might have a spouse > 10 yrs. younger who is sole beneficiary of one IRA but not the sole beneficiary of another IRA. In that case you would have to calculate the RMDs separately since the denominators are different for the 2 IRAs and then add the RMDs. You could not add the IRA values first and divide by a single number since there are 2.
(T1/F1) + (T2/F2) not equal to (T1+T2)/?
Sorry... I missed your main point, I guess.

We don't have anything but our own individual IRA's and 403b's, so I hadn't really ever been thinking about the "denominator" issue when combining.

Now that you've pointed it out, it makes more sense that the "rules" are to calculate each RMD separately. I hadn't thought about that type of situation before, and couldn't figure out why IRS would be so concerned about what would be such a tiny amount, IF it was anything at all!

Thanks.

RM
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RudyS
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Re: rmd for IRAs at multiple institutions

Post by RudyS » Mon Sep 17, 2018 8:40 pm

I don't actually calculate my RMDs. Fidelity, and Vanguard, tell me each year what the RMD for my account with each will be. All I do is make the withdrawals. My choice whether to taker it all from one, or part from each, so long as the total is right.

Lynette
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Re: rmd for IRAs at multiple institutions

Post by Lynette » Mon Sep 17, 2018 9:21 pm

I have IRAs at Fidelity and Vanguard. I also let them calculate what I owe and do each separately. If there is a query on my taxes years later, I would not like to have to prove that I took sufficient RMDs from multiple institutions.

sport
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Re: rmd for IRAs at multiple institutions

Post by sport » Mon Sep 17, 2018 9:30 pm

RudyS wrote:
Mon Sep 17, 2018 8:40 pm
I don't actually calculate my RMDs. Fidelity, and Vanguard, tell me each year what the RMD for my account with each will be. All I do is make the withdrawals. My choice whether to taker it all from one, or part from each, so long as the total is right.
It is worthwhile to calculate your RMDs to verify that Fidelity, Vanguard, etc. are accurate. If they make a mistake, it would be you who would get to pay the penalty. The calculation is not difficult. It is the account balance on the previous Dec 31, divided by the factor given in the appropriate table in IRS Pub 509B.

kaneohe
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Re: rmd for IRAs at multiple institutions

Post by kaneohe » Mon Sep 17, 2018 9:42 pm

Lynette wrote:
Mon Sep 17, 2018 9:21 pm
I have IRAs at Fidelity and Vanguard. I also let them calculate what I owe and do each separately. If there is a query on my taxes years later, I would not like to have to prove that I took sufficient RMDs from multiple institutions.
Reminds me about stories of whether you should keep your own cost basis even tho the institutions are supposed to be doing it these days for covered securities. Not so much that I don't trust them........just feel better if we get the same number. I have a 401K at Fidelity and used to just order the withdrawals manually. This year was the first that I let them process the RMDs automatically. I was surprised that the 1st quarterly installment was a bit off from what I expected.....not a large amount ....$10-20.....but noticeable. Called Fidelity and we agreed on previous yr end value so it was a mystery to me. Thanks to a sharp rep who noticed that the value used in the RMD calculation was also for the last day of yr.......except it was beginning of day instead of end of day.

RudyS
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Re: rmd for IRAs at multiple institutions

Post by RudyS » Tue Sep 18, 2018 8:52 am

sport wrote:
Mon Sep 17, 2018 9:30 pm
RudyS wrote:
Mon Sep 17, 2018 8:40 pm
I don't actually calculate my RMDs. Fidelity, and Vanguard, tell me each year what the RMD for my account with each will be. All I do is make the withdrawals. My choice whether to taker it all from one, or part from each, so long as the total is right.
It is worthwhile to calculate your RMDs to verify that Fidelity, Vanguard, etc. are accurate. If they make a mistake, it would be you who would get to pay the penalty. The calculation is not difficult. It is the account balance on the previous Dec 31, divided by the factor given in the appropriate table in IRS Pub 509B.
The first time or two, I did do the calculation myself. After that, the year to year variations were about as expected, so I just haven't bothered.

Alan S.
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Re: rmd for IRAs at multiple institutions

Post by Alan S. » Tue Sep 18, 2018 3:05 pm

jj wrote:
Thu Sep 13, 2018 8:29 am
This wasn't part of your question but if you 'only just' turned 70 then you do not turn 70.5 until 2019, so there is no RMD requirement until next year at the earliest.

Yes, 70.5 to the day determines the first IRA distribution year. Moreover, that first distribution year RMD can be deferred to as late as 4/1 of the following year in whole or in part.

Therefore 70.5 is a one time RMD management option. While in most cases simply taking that first RMD entirely in the 70.5 year, there can be individual situations in which deferral will reduce taxes over the two year period. Takes some projections and number crunching however to complete the analysis.

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