We were surprised to learn from your column that one cannot aggregate required minimum distributions (RMDs) from a 403(b) and a 457 plan. Please elaborate. Also, when my husband retires from New York State, can he transfer his 457 money to a credit union IRA?
Certainly. He can transfer it to an IRA at any provider he chooses.
The easiest way to explain the RMD aggregation rules is with an example. But first, a reminder: Just before Christmas, Congress changed the deadline for taking first RMDs. If you were under 70½ at year-end, that deadline is now April 1 of the year after you turn 72. (But you should still take your first RMDs by Dec. 31 of the year before the April 1 deadline to avoid taking your first and second RMDs in the same tax year.)
Let's say you turn 72 in 2020, have four IRAs, a 403(b), a 401(k) and a 457, and you plan to take your first RMDs by Dec. 31, 2020. You calculate the RMD amount for each account by dividing its 2019 year-end balance by your life expectancy, which you'll find in the actuarial tables of IRS Publication 590.
Let's say the RMDs from your four IRAs are $2,400, $1,600, $843 and $72, respectively. You can aggregate — i.e., combine — those RMDs. They add up to $4,915, which you can take from a single IRA or from any combination of your IRAs.
Let's say the RMDs from your 403(b) plan, 401(k) plan and 457 plan are $1,200, $1,300 and $781, respectively. Those RMDs can't be combined. You must take $1,200 from the 403(b) plan, $1,300 from the 401(k) plan, and $781 from the 457 plan.
The bottom line
It's important to check the RMD rules for each type of retirement account you own.
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