IRA aggregated with Qualified Plan for RMD

[R. Butler]

Participant A receives a RMD from ABC, Inc. PSP. Assets for ABC, Inc. PSP are held at American Funds. Participant A also has an IRA with American Funds. Participant A's broker has the RMD for the IRA withdrawn from the ABC, Inc. PSP.

It is my understanding that although 2 or more IRA's can be aggregated for RMD purposes, and IRA cannot be aggregated with a qualified plan. Has something changed that I am missing?

Assuming I am correct that the IRA RMD should not have been taken from the ABC, Inc. PSP, what are the ramifications to the Plan? I can see immediately that withhloding would not have been done correctly. Is there anything else? I don't think so, but just want to double check. (Under the document participant can take in-service distributions any time because he's reached NRA.)

Thanks in advance for any guidance.

[david rigby]

I think the rules can be summarized as:

- IRA's can be combined to determine the total RMD, and then the actual distribution can be from one or more, although that may cause documentation concerns.

- Each qualified plan stands on its own for determining and completing the RMD.

[R. Butler]

Just so I am absolutely clear, can the RMD due from the IRA be taken from the qualified plan? I have always learned that it could not, but don't know if anything has changed.

[jevd]

As Pax said. Only IRAs may be aggregated with each other after being separately calculated to determine the toal required distribution for the IRAs that an individual holds.

See 1.408-8 Q&A 9

Inherited IRAs are a separate issue and may not be aggregated with other IRAs held by the same individual. Those may be aggregated separately but only if they are inherited from the same decedent. See Reg above.

Each Qualified Plan must satisify the RMD on its own. No aggregation is allowed. Separate withdrawals for a PSP or MPP or 401(k). See REG 1.401(a)(9)-8 Q&A 1.

[Appleby]

...also, you mentioned that the withholding would not have been done correctly. What do you infer by this statement? If you refer to the 20% withholding, note that the 20% w/h rules does not apply to an RMD amount, because the RMD amount is not rollover eligible