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Ask the Expert: How to calculate required minimum distributions

The IRS website says that if you have more than one IRA, you must calculate the annual RMD for each IRA separately. But you can then aggregate those RMD amounts and withdraw the total from one IRA. You don't have to take a separate RMD from each IRA. Why can't I just add up all my IRA balances and then calculate the RMD based on that total? The result should be identical. Is there an explanation, or is this just government jargon?

It generally makes no mathematical difference whether you calculate each required minimum distribution separately and then combine them, or calculate one RMD based on the total year-end balances of your individual retirement accounts. The exception is a situation in which you must use more than one actuarial table.

In general, people determine their RMD by dividing their IRA's previous year-end balance by the life expectancy factor listed in the IRS Uniform Lifetime actuarial table. But if you have an IRA on which the sole beneficiary for the entire year was a spouse more than 10 years younger than you, you must use the Joint Life table to calculate your RMD. The Joint Life table produces a smaller RMD for that IRA — an advantage lost unless you calculate a separate RMD for each account.

The bottom line

Sometimes there’s a good reason for complicated government instructions.

More information

Note: In my April 25 column, I wrote that a taxpayer must meet several requirements to claim a capital loss on the sale of an inherited house, including a requirement that it wasn't used for rental income before the sale. But I should have added that if the house was rented before the sale, it became business property, potentially allowing taxpayers to claim an ordinary loss (not a capital loss) when they sold it. More information:

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