RMD Aggregation
RMD aggregation is the IRS rule (IRC §408(a)(6); Reg §1.408-8 Q&A-9) permitting required minimum distributions to be totaled across multiple accounts of the same type and satisfied by withdrawing the aggregate from any one or any combination of the accounts. Aggregation applies to IRAs and 403(b)s; 401(k)s and similar qualified plans are explicitly excluded.
The aggregation rule exists for operational simplicity. An IRA holder with five Traditional IRAs across three custodians can compute the total RMD across all five and satisfy it with a single withdrawal from a single account, rather than withdrawing the per-account RMD from each. This matters because RMD calculations are mechanical (December-31 prior-year balance ÷ life-expectancy factor) and the per-account amounts can be inconvenient (e.g., RMDs of $4,200 from one IRA, $1,800 from another).
The aggregation is type-bounded. Traditional IRAs aggregate together. Roth IRAs have no RMDs for the original owner, so aggregation is moot for them during the owner's lifetime. Inherited IRAs aggregate only with other inherited IRAs from the SAME decedent — an heir who inherits IRAs from both a parent and a spouse cannot cross-aggregate. 403(b)s have their own aggregation pool (separate from IRAs). 401(k)s do not aggregate at all — each 401(k) account must satisfy its own RMD before December 31, even if the account holder has other 401(k)s with excess withdrawals.
The most common production bug at wealth platforms is treating all retirement accounts as cross-aggregable. A retiree with two 401(k)s and one IRA who 'over-distributes' from the IRA still owes RMDs on each 401(k); failure to take the per-401(k) RMD triggers the §4974 50% excise tax (reduced to 25%, or 10% if corrected promptly, under SECURE 2.0). The penalty is on the un-distributed amount, not the over-distributed.
| Aggregable | Not aggregable | |
|---|---|---|
| Traditional / SEP / SIMPLE IRAs | Yes — same pool | |
| 401(k)s | No — per-account distribution required | |
| 403(b)s | Yes — separate pool from IRAs | |
| Inherited IRAs (same decedent) | Yes — own pool | |
| Inherited IRAs (different decedents) | No — separate pools per decedent |
Test data needs households with multiple retirement accounts of mixed types — IRA + 401(k) + 403(b) + inherited IRA combinations. The RMD-aware engine has to compute the aggregable groups correctly and flag per-account requirements where aggregation does not apply. Edge cases: inherited IRAs from multiple decedents (cannot cross-aggregate), spouse-rollover IRA (aggregates with own IRAs), QCD interactions (covered separately).
Common pitfalls
- Cross-aggregating 401(k)s with IRAs — the rule explicitly excludes qualified plans; per-account distribution is required.
- Treating inherited IRAs from different decedents as one pool — they aggregate only within the same decedent.
- Using the prior-year 12-31 balance after a year-end rollover but before the rollover settles — the IRS uses the actual 12-31 balance.
- Forgetting that the first RMD year offers the option to defer to April 1 of the following year, which then forces two RMDs in the same calendar year.
Examples
Retiree (age 75) holds $400,000 in IRA-A, $250,000 in IRA-B, $150,000 in IRA-C. Single life-expectancy factor (Uniform Lifetime Table, age 75): 24.6. Total RMD: $800,000 / 24.6 = $32,520. Can be satisfied by withdrawing the full $32,520 from IRA-A and nothing from B or C, or any other combination — as long as the aggregate hits $32,520.