Do you understand RMD rules?

Kiplinger's Personal Finance

Q: Are there any differences in the RMD rules for 401(k)s and for IRAs?

A: The basic rules are similar: You generally must take required minimum distributions from traditional IRAs and 401(k)s every year after you turn age 70 1/2, and you use the same IRS life expectancy tables to calculate the amount (see our RMD calculator at But there are differences in how and when you take the money.

Calculating the RMD: You can add up the balances in all of your traditional IRAs as of Dec. 31 of the previous year, divide that by the IRS life expectancy factor, and take the money from any one or more of your traditional IRAs. With 401(k)s, you must calculate the required distributions separately for each 401(k) account and withdraw the required amount from each account.

Your 401(k) administrator may automatically send you the required amount if you haven’t taken it by a certain date (usually late December).

What happens if you’re still working: If you’re still working past age 70 1/2, you don’t have to take RMDs from your current employer’s 401(k) until after you leave your job (unless you own 5 percent or more of the company). But you do have to take RMDs from previous employers’ 401(k)s and from your traditional IRAs after age 70 1/2, even if you’re still working.

You may be able to delay taking those RMDs, however, if your current employer allows you to roll over money from other retirement accounts into its plan.

Roth IRAs and Roth 401(k)s: You don’t need to take RMDs from Roth IRAs, but you do need to take them from Roth 401(k)s each year (the withdrawals from a Roth 401(k) aren’t taxable).

However, you can roll money over from a Roth 401(k) to a Roth IRA to avoid taking future RMDs. (If you’re over age 70 1/2, however, you’ll have to take that year’s required distribution from the Roth 401(k) before you can do the rollover.)

Tax-free transfers to charity: If you’re over 70 1/2, you can transfer up to $100,000 each year from your IRA to charity tax-free (called a qualified charitable distribution). The amount you transfer to charity counts as your RMD but isn’t included in your adjusted gross income. But you can’t make a tax-free transfer from your 401(k) to charity.

However, you can roll over money from your 401(k) to an IRA and make future QCDs.

Kimberly Lankford is a contributing editor to Kiplinger’s Personal Finance magazine. Send your questions and comments to

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