Does a 401(k) Required Minimum Distribution Count Towards an IRA Required Minimum Distribution?
Quick Answer
A 401(k) required minimum distribution cannot count towards an IRA required minimum distribution because required minimum distributions for each 401(k) plan must be calculated and withdrawn separately, reports the IRS. Holders of multiple traditional IRAs can withdraw funds from one IRA to satisfy distribution requirements for all of them.
Continue ReadingFull Answer
Although most of the rules for traditional IRAs and defined contribution plans, such as 401(k) accounts, are similar, the methods of handling required minimum distributions differ, according to the IRS. Account holders must take required minimum distributions individually from each 401(k) plan. Although account holders must calculate required minimum distributions of each traditional IRA separately, they can withdraw funds from any of the accounts to satisfy the requirement. IRA account holders should take the distribution from the account paying the poorest percentage, advises U.S. News & World Report Money.
Required minimum distributions are calculated by dividing the balance in the IRA or defined contribution plan as of December 31 of the previous year by the estimated lifetime of the account holder according to an IRS table, as reported by Bankrate. The distributions must begin by April 1 of the year after the account holder turns 70 1/2, or the amount that should have been distributed is subject to a penalty tax of 50 percent. Account holders must take subsequent required minimum distributions by December 31 of each year.
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