Even if one has multiple IRAs, the IRS will treat them all as a single IRA. This is known as the aggregation rule, and this rule can make a significant impact. Yearly minimum distributions must be taken from IRAs, and depending on the specific circumstances, it may or may not be possible to withdraw from specific IRAs or deduct withdrawals from taxes. It is important to note the differences between traditional and Roth IRAs and to keep in mind the rules regarding 60-day rollovers, and one should also remember that minimum distributions are mandatory for 401(k)s, although the aggregation rule does not apply to them.
Key Takeaways:
- Even if one has a number of IRAs, the IRS treats them as one single IRA.
- Depending on the circumstances, one may or may not be able to withdraw from specific IRAs.
- Both IRAs and 401(k)s require minimum distributions, with specific rules for each respective account type.
“That wrinkle, known as the aggregation rule, can create surprises if you don’t understand when it comes into play.”
