The IRS Aggregation Rules

When it comes to Required Minimum Distributions (RMDs), the IRS has strict “aggregation rules” that dictate which accounts can be lumped together to satisfy your withdrawal requirements and which ones must be handled individually.

Accounts You Can Aggregate (With Themselves)

For these accounts, you must calculate the RMD for each individual account separately, but you can sum up the total dollar amount and withdraw it from any one (or combination) of those accounts:

• Traditional IRAs (including Rollover IRAs, SEP IRAs, and SIMPLE IRAs): All of your individual IRA accounts can be aggregated together. For example, if you have three separate Traditional IRAs at three different brokerages, you can calculate the total required amount across all three and pull the entire sum out of just one IRA.
• 403(b) Plans: If you worked for nonprofits, schools, or hospitals and have multiple 403(b) accounts, you can aggregate them together. You can add up the RMDs for all your 403(b)s and take the total distribution out of just one 403(b) account.
• Inherited IRAs: If you inherited multiple IRAs from the exact same person, you can aggregate them. You cannot aggregate an inherited IRA with your own personal IRAs, nor can you aggregate IRAs inherited from two different people (e.g., one from your mom and one from your brother).

Important Trap: You cannot cross aggregate different account families! You cannot satisfy an IRA RMD by taking extra money out of a 403(b), nor can you satisfy a 403(b) RMD by taking it out of a Traditional IRA. IRAs only combine with IRAs; 403(b)s only combine with 403(b)s.

Accounts You Cannot Aggregate

For these workplace retirement plans, each account is a walled garden. You must calculate the RMD for each plan and take that specific dollar amount directly out of that specific account:

• 401(k) Plans: If you have three different 401(k)s from former employers, you must take three separate distributions, one from each plan. You cannot combine the RMD amounts and pull it all from one 401(k).
• 457(b) Plans: Commonly offered to state and local government employees, these cannot be aggregated. If you have more than one, you must take an RMD from each individual plan.
• Other Employer Plans: Profit sharing plans, money purchase plans, and defined benefit plans also require standalone distributions.

What About Roth Accounts?

• Roth IRAs: Original owners never have to take lifetime RMDs from a Roth IRA.
• Roth 401(k)s / Roth 403(b)s: Prior to 2024, you had to take RMDs from workplace Roth accounts (and they could not be aggregated). However, under the SECURE 2.0 Act, lifetime RMDs for designated Roth accounts in employer plans were eliminated starting in 2024. You no longer have to worry about RMDs for any Roth balances while you are alive.

A Pro Tip for Simplicity

If you have multiple old 401(k)s from previous employers and you are approaching your RMD age (currently age 73), managing multiple separate distributions every year can be a bureaucratic headache.

Many retirees choose to roll their old 401(k)s over into a single Traditional IRA before they reach RMD age. By consolidating them into an IRA, you place all your pre tax money under the “IRA Aggregation Umbrella,” allowing you to manage just one balance and take just one distribution from a single brokerage account each year.