Why RMD planning matters for owners of multiple accounts

If you hold more than one retirement account (multiple IRAs, 401(k)s, 403(b)s, etc.), Required Minimum Distributions (RMDs) affect cash flow, income taxes, and estate planning. Missed or incorrect RMDs historically triggered a heavy excise tax and can push you into a higher tax bracket if withdrawals are not timed carefully. Recent law changes have adjusted RMD ages and penalties, so up-to-date planning matters (see IRS guidance on RMDs) IRS — Required Minimum Distributions (RMDs).

This article explains how RMDs are calculated across multiple accounts, highlights aggregation and distribution rules, and offers actionable strategies—consolidation, Roth conversions, Qualified Charitable Distributions (QCDs), and timing—to reduce taxes and simplify administration. It includes examples, common pitfalls, and a short checklist you can use in a planning meeting with your advisor or tax preparer.

Sources cited in this guide include IRS Publication 590-B and IRS web guidance on RMDs and QCDs (current as of 2025). This content is educational and not individualized tax advice. Always consult a qualified advisor for decisions that affect your taxes.

How RMDs are calculated when you own multiple retirement accounts

  • Calculation basis: For each applicable account you owned at the end of the prior year, the RMD equals that account balance divided by your IRS life expectancy factor from the Uniform Lifetime Table (or the Joint Life and Last Survivor Table in limited situations). See IRS Publication 590-B for the tables and calculation rules.
  • Aggregation rules (key practical point):
  • Traditional IRAs: You calculate RMDs for each traditional IRA separately but you may withdraw the total RMD amount from any one or more of your traditional IRAs. In practice, that means you can aggregate RMDs across all IRAs (traditional, SEP, SIMPLE) and take the total from one account. (IRS: Retirement Topics — RMDs.)
  • Employer plans (401(k), 403(b), 457(b)): Generally, RMDs must be satisfied from each plan separately. That means if you have multiple 401(k) accounts with different employers, you ordinarily must take the RMD from each plan. A common simplification is to roll former employer 401(k) balances into an IRA before RMD age when possible; rolling pre-tax funds into an IRA allows IRA aggregation but has tax and timing implications. See IRS guidance for plan-specific rules.

Note: 403(b) plans sometimes have special rules depending on the plan document; consult the plan administrator and IRS materials if you have 403(b) accounts.

Recent law changes that affect RMDs and penalties

  • RMD starting age: The SECURE Act (2019) raised the RMD age to 72; SECURE Act 2.0 (2022) moved the age again for certain cohorts. As of 2025, many individuals begin RMDs at age 73 depending on birth year—check the IRS page to confirm the exact age that applies to you. (IRS Retirement Topics — RMDs.)
  • Excise tax for missed RMDs: SECURE Act 2.0 reduced the excise tax for missed RMDs. The historic 50% penalty was lowered to 25% for failures after December 31, 2022, and may be cut to 10% if the missed amount is corrected under IRS procedures. Check current IRS guidance or your tax advisor for the correct application of these rules and correction procedures.

Practical strategies for owners of multiple accounts

  1. Consolidate when it makes sense
  • Rolling old 401(k) or 403(b) balances into a traditional IRA before you reach RMD age can simplify record-keeping because IRAs can be aggregated for RMD purposes. Consolidation removes the need to take separate distributions from multiple employer plans, but watch for plan restrictions, rollover deadlines, and potential loss of certain 401(k) creditor protections.
  • Action step: Ask your former plan administrator about rollover options and obtain a direct trustee-to-trustee transfer to avoid withholding and inadvertent taxable events.
  1. Use Roth conversions strategically
  • Converting pre-tax balances to Roth IRAs reduces future RMDs because Roth IRAs do not require RMDs during the original owner’s lifetime. Conversions create taxable income in the conversion year, so target years when your taxable income and marginal tax rate are lower.
  • Example: If you expect future tax rates to be higher or expect Medicare IRMAA thresholds to apply later, converting smaller amounts over several years can be more tax-efficient than large one-time conversions.
  • Action step: Model conversion scenarios with your tax advisor and consider the interaction with Social Security taxation and Medicare premiums.
  1. Consider Qualified Charitable Distributions (QCDs)
  • If you’re charitably inclined and age-eligible, a QCD lets you transfer up to $100,000 per year directly from an IRA to a qualified charity to satisfy all or part of your RMD without counting the distribution as taxable income. QCDs aren’t allowed from employer plans unless you roll money into an IRA first.
  • Action step: Verify charity eligibility and plan the transfer well before year-end. See the IRS page on QCDs for details.
  1. Timing and year-to-year planning
  • First-year timing: You may defer your first RMD to April 1 of the year after you reach RMD age. That creates a situation where you may owe two RMDs in a single calendar year (the deferred first RMD plus the current year’s RMD), which can spike taxable income. Often it’s preferable to take the first RMD in the year you reach RMD age (by Dec 31) to avoid bunching income into one tax year.
  • Monthly or quarterly distributions: If you prefer steady cash flow, set up periodic withdrawals to spread tax impact. Some retirees find quarterly distributions reduce the chance of administrative errors.
  1. Coordinate withdrawals with other income sources
  • Use an income forecast that includes Social Security, pensions, brokerage withdrawals, and expected RMDs to avoid pushing yourself into a higher tax bracket or increasing Medicare Part B/D premiums.
  • Action step: Run at least a three-year income projection around your expected RMD start date to identify “conversion windows” or years where a partial Roth conversion is tax-efficient.

Example: Combining multiple IRAs and a 401(k)

Imagine you have three IRAs and one 401(k): IRAs total $450,000, and the 401(k) is $300,000. Using the Uniform Lifetime Table factor, you calculate an aggregate IRA RMD of $17,577 (separate calculations added) and a 401(k) RMD of $11,718. You may withdraw the full IRA RMD from any one IRA or across the IRAs, but you must take the 401(k) RMD from the plan (or roll the 401(k) to an IRA before RMD age so it becomes part of the IRA aggregation rule). Rolling the 401(k) into an IRA before RMDs begin would allow you to combine that RMD with your IRAs, but the rollover must be executed before the year you need to start RMDs.

Common mistakes to avoid

  • Missing the deadline: Don’t mistakenly skip an RMD. The excise tax and paperwork to correct it are avoidable with proactive calendar reminders.
  • Treating all accounts the same: Different rules apply to IRAs vs employer plans and Roths vs traditional accounts.
  • Waiting until the last minute: Year-end account statements can change your RMD amount; start calculations early and leave time for transfers.

Quick planning checklist

  • Confirm your RMD starting age based on your birth year (IRS RMD guidance).
  • List every retirement account and get prior-year-end balances for each.
  • Decide whether to consolidate eligible accounts (rollovers) before RMDs begin.
  • Model partial Roth conversions across low-income years.
  • Evaluate using QCDs for charitable giving (up to $100,000 cap as of 2025).
  • Set calendar reminders for RMD deadlines and fund transfers.
  • Coordinate with your tax preparer to understand impacts on tax brackets and Medicare premiums.

Where to learn more (internal resources)

Professional disclaimer: This article is educational and does not provide personalized tax, legal, or investment advice. Rules for RMDs and related penalties changed under federal law in recent years; consult the IRS pages cited below and a qualified tax professional before making decisions that affect your retirement or taxes.

Authoritative sources:

If you’d like, bring your account list and recent statements to a planning session with a CPA or CFP to translate these strategies into a year-by-year plan tailored to your situation.