Managing Dual Inherited and Personal Six-Figure RMDs
Episode 54
Managing Dual Inherited and Personal Six-Figure RMDs
Published on Sept 30th, 2026
Episode Summary
Episode 54 of Retirement Tax Matters examines the operational and tax challenges high-net-worth households face when coordinating required minimum distributions across multiple accounts. For retirees in the $2M to $8M asset tier, receiving an inherited IRA alongside personal pre-tax retirement accounts can quickly create a multi-account RMD scenario requiring separate drawdown calculations. Garrett Crawford, CFP® and Adam Reed break down IRS aggregation rules, highlighting why personal traditional IRAs can be combined for single-account withdrawals while inherited IRAs must be calculated and distributed independently. The discussion covers spousal account boundaries, annuity income rider nuances, and the strict rule preventing excess inherited withdrawals from offsetting personal required distributions. Garrett outlines three primary strategies for handling forced cash flow, including direct spending, reinvesting net proceeds into a taxable brokerage account, and leveraging Qualified Charitable Distributions at age 70.5. Adam closes with a practical perspective on decumulation, explaining how systematic distributions can serve as efficient living income while preserving taxable brokerage assets for a future step-up in basis.
Key Tax Planning Questions
Question 1: Can you combine inherited IRA and personal IRA RMDs?
The short answer is no. The IRS views an inherited IRA as a completely distinct account type from your personal pre-tax Traditional IRAs or 401(k) balances, and they are governed by separate distribution rules under the tax code.
To understand why, it helps to look at how IRS account aggregation rules work. If you own multiple personal Traditional IRAs, the IRS allows you to calculate your required minimum distribution by adding up the December 31st balances from the prior year across all of those personal accounts. You can then satisfy that total combined distribution from a single personal Traditional IRA or spread it across multiple accounts as you see fit.
However, IRS aggregation rules do not extend across different account types. An inherited IRA cannot be aggregated with your personal Traditional IRAs. Furthermore, you cannot aggregate inherited IRAs received from different deceased individuals.
For example, imagine you have a $45,000 RMD required from your personal Traditional IRAs and a $10,000 RMD required from an inherited Traditional IRA. Some retirees might wonder if they can simply take a single $55,000 distribution entirely out of the inherited account to draw down those pre-tax funds faster while leaving their personal IRA untouched. Under federal tax guidelines, this is unallowed. In this scenario, you must take $10,000 directly from the inherited IRA and a separate $45,000 from your personal Traditional IRA to remain compliant.
If you fail to satisfy the required distribution from either specific bucket, the IRS considers that a missed RMD for that account, which can trigger a 25% excise tax penalty on the unwithdrawn amount. Coordinating these separate rules is essential to keeping your distribution plan compliant and on track.
Question 2: Can you use a QCD on an inherited IRA RMD?
Yes. Many retirees are surprised to learn that you can execute a Qualified Charitable Distribution (QCD) from an Inherited IRA similar as you would from a personal Traditional IRA.
For charitably inclined retirees who are age 70.5 or older, a QCD is often one of the most efficient ways to fulfill charitable giving goals. By sending funds directly from an Inherited IRA to a qualified 501(c)(3) charity, the distribution counts toward your required minimum distribution for that inherited account, avoids taxable income reporting on your tax return, and goes to the charity tax-free. For retirees taking the standard deduction, this direct transfer is usually far superior to writing a check out of a personal checking account. However, there are a few important rules to keep in mind when coordinating QCDs across multiple accounts.
First, your eligibility to make a QCD depends on your own age, not the age of the deceased original account owner. You must be age 70.5 or older on the date the distribution is processed.
Second, IRS account aggregation rules do not cross over between inherited accounts and personal pre-tax retirement accounts. While your personal Traditional IRAs can be combined to calculate a single personal RMD, an Inherited IRA sits in a completely separate bucket. If your Inherited IRA RMD is $10,000 and you execute a $15,000 QCD from that inherited account, the $5,000 surplus cannot be applied to satisfy an RMD on your personal Traditional IRA. Each account type must satisfy its own required distribution independently.
Finally, if you discover this strategy after you have already satisfied your Inherited IRA RMD through a standard taxable withdrawal, you can still execute a QCD in the same calendar year. That additional QCD will be tax-free up to the annual federal limit ($108,000 in 2026), but it cannot retroactively reclassify or offset the taxable income from your earlier IRA distribution.
Full Episode Transcript
Adam: Good morning, and welcome to Retirement Tax Matters. I'm Adam Reed. This is Garrett Crawford, CFP® professional, and this morning we're jumping into a topic that I think most people are familiar with and are aware of, especially in this tax planning space, because it's a big milestone that eventually hits or works into your plan well.
Adam: We're jumping into RMDs today, and I don't think we're necessarily going to talk so much about tax implications or how to minimize them, but more so a crash course on what things people miss, what items people leave off their radar that can really affect their planning. It can maybe even get them into some sticky situations with an account that they're forgetting about or leaving out there, especially with a lot of people probably in the age bracket that we're talking to who maybe just had a parent pass away or an in-law pass away and have inherited IRAs. There are just a lot of different accounts to keep track of.
Adam: So, wanting to dive into RMDs today and talk through what things you don't want to miss and a few things that are really important as you're thinking about planning. I know we just did our two-part series for those still working and those retired or thinking about retirement on year-end tax planning. Maybe a good time to plug the year-end tax planning checklist down below in the description. But as people are thinking about RMDs, what do people need to think about? Most people think about their RMD from their biggest IRA account, but there really are multiple different accounts that RMDs can be coming from. So give us a crash course or a little bit of an overview of what we're talking about today and what we're looking into.
Garrett: I just imagine people on Wednesday morning sitting down in their chair in the morning thinking, "Oh, I wonder what Garrett and Adam are going to bring to us today as far as tax planning goes."
Garrett: Today was actually interesting. I was going through and trying to figure out a topic that we haven't specifically hit a lot. We talk about RMDs a lot, but I think today is a good day to dive a little bit deeper into the topic.
Adam: Well, and that's the funny part about making content, I feel like we've talked about these so frequently, but I think we only have one dedicated episode to it.
Adam: Yeah, and it's kind of how to minimize RMDs if you're not RMD age yet. But this is maybe more for somebody going into that first year of RMDs or maybe somebody in RMDs that inherited an account or something like that.
Garrett: Yeah. Well, I want to start with a little comment that you just alluded to.
Garrett: I think a lot of people are very cognizant that required minimum distributions exist. I would also add that if you're like me and you do this every day, you might be a little disoriented right now in 2026 about what the current RMD rules are. I think we're not necessarily going to hop into all of those today, but the SECURE Act that came out in 2020 and then these ongoing congressional meetings where they're trying to clarify what they meant when switching over to this 10-year distribution period for inherited IRAs, that has been quite the saga.
Garrett: To keep it real simple, for people turning 73 here in the next couple of years, and then eventually age 75, that is when these required minimum distributions will kick in. I've seen a lot of people, whether in the comments below or clients I've come across over a decade working with them, have a tendency to get a bit of tunnel vision.
Garrett: If you're a married person, the focus often goes to the spouse who has the bigger IRA. On this channel, we specialize in retirees and pre-retirees in that $2 million to $8 million IRA space. For a lot of your career, the Roth IRA or Roth 401(k) wasn't an option, so you were dumping money into a pre-tax, tax-deferred retirement plan. You've gotten to the point where you may have a multi-million dollar pre-tax IRA that will trigger RMDs down the road at age 73 or 75.
Garrett: If you've got a big multi-million dollar IRA, you can be thinking, "Oh boy, what are the RMD ramifications going to be 10 years into the future when I have to start taking that?" That's really important, and we've addressed that in a different episode linked down below. But because we can get tunnel vision on that real big RMD, we kind of forget the complexity that awaits us in the world of RMDs. If you're married, your spouse might also have a required minimum distribution when they turn 73 or 75.
Garrett: Really what I wanted to hammer home today is this dual-threat RMD, kind of like a dual-threat quarterback who can pass and run. The RMD can come get you two different ways, and that's also through an inherited IRA.
Garrett: As I was preparing for this, I was thinking back to when I first started in the industry 13 years ago, when it was more common for pensions to be a large portion of a retiree's income. Over these 13 or 14 years I've been in the industry, you're starting to see retirees die with larger and larger IRA balances as they had 401(k)s during their employment period.
Garrett: If you're getting ready to go into retirement, especially if you're in this $2 million to $8 million space, there's going to be a higher chance than not that you're also going to inherit a traditional IRA under the SECURE Act 2.0 rules and the 10-year distribution period.
Garrett: We'll talk about that here in a second, but you could have your own required minimum distribution, you may end up getting a parent's IRA requiring its own required minimum distribution, and if you're married, your spouse may have their own IRA and may even have their own inherited IRA. That's not even to mention if you come through an inherited IRA as a successor beneficiary or a non-spousal beneficiary.
Garrett: So I'll kind of close the intro up there, but there are lots of different RMDs, and I think sometimes we can underestimate the complexity of the RMD calculation that comes in.
Adam: You said dual-threat quarterback, and we record this on Thursday, so this Saturday is the Tennessee versus Texas football game. My father-in-law and I are going, so if this is the last episode you ever see of me, it's because Tennessee won, I tore down the goalpost, and I'm sailing down the Tennessee River singing a Dolly Parton song.
Garrett: I can see you doing that with some type of fake mullet wig on and just going nuts.
Adam: Anyway, big weekend for college football, but back to the topic at hand.
Adam: With RMDs, there are a couple of tricky rules with aggregation. Typically, somebody has to take all of their IRA money and then look at an RMD for that money. But there are a couple of accounts that are different and a couple that might sneak up on you, including how spouses work together.
Adam: Could you touch on a couple of topics there that might be helpful for people thinking through, "Hey, I've got an annuity. I've got an inherited IRA. I've got a few different buckets. What do I pull together? What don't I?" Help us think through aggregation when it comes to RMDs.
Garrett: When I started in this and they asked me for the first time to calculate all the RMDs for clients, we had software, but as you find out, software can't handle it. Even Adam and I for the past couple of years were saying, "This software keeps messing up. It's not adding it up the right way." It makes it worse than if you just did it yourself.
Garrett: I want to talk for a couple of minutes about the aggregation rule with required minimum distributions. Whether you're familiar with it or not, it's not uncommon, in fact, I think it's more common these days as technology has gotten better, to have different IRAs at different custodians.
Garrett: Let's say you had a 401(k) and rolled that over into a traditional IRA. If you have more than one traditional IRA, which some might think is wild, why would anybody have more than one, we have clients who have more than one IRA for different reasons, such as mental income bucketing, separating money for mental accounting, or other necessary reasons.
Garrett: If you have more than one IRA, what the IRS allows you to do is take the 12/31 balance of each of those IRAs from the prior year. Right now we're in 2026, so handling 2026 RMDs is based on the value of the IRA on 12/31/2025. What the IRS says with the RMD aggregation rule is that you can add up those 12/31/2025 balances and calculate a total RMD. The IRS doesn't really care which of your traditional IRAs you pull that required minimum distribution from.
Garrett: That makes it way easier for you as a retiree. If you have one big $2 million IRA and two or three other straggling pre-tax traditional IRAs, you can just pull the entire RMD from one account. Maybe you pull it all from one of those smaller accounts and just eliminate it. The IRS is not going to come after you because you don't take the exact correct amount of required minimum distribution from each individual traditional IRA. I think that's a good thing and probably how most people would hope calculating an RMD would be.
Garrett: If all you had was one RMD, that would be great. But a lot of people are married. What the IRA aggregation does not extend to is that you cannot take one RMD for you and your spouse. You can't just add up all your IRA money and your spouse's IRA money and take out one RMD. Those are two separate IRA pots that require two separate required minimum distributions.
Garrett: Anecdotally, Adam and I work with clients who have annuities, and that can add a little wrinkle to this IRA aggregation rule. Depending on whether they have annuitized their annuity impacts the RMD calculation versus if they have an income rider that they're generating income from. Annuitization usually takes that annuity off the table where you don't have to include it in the aggregation RMD rule, but if it has an income rider, it's still part of that calculation.
Garrett: We were talking right before this episode about how, working with over 200 client households, going through and figuring this out requires extra effort. This person is taking $3,000 a month from this IRA, they've got an annuity kicking off another $1,750 per month that indexes to inflation (so make sure you're using the right number), others have an annuitized annuity, others do free withdrawals, and others do one-time lump sum distributions from an IRA. Going through and calculating the aggregate IRA RMD for all of those accounts can be pretty labor-intensive.
Garrett: It is one of the reasons why you'd think software would be really good at this. Maybe we'll get there one day, but it's really hard for software to go across different custodians like an insurance company and Charles Schwab to figure out what that total RMD is. They kind of default to the lowest common denominator, where custodians like Schwab will just calculate the RMD per account, and it's up to you to figure out the aggregated total.
Garrett: We'll wrap all that up into normal required minimum distribution complexity that you might expect. But going one step further: when you have an inherited IRA in the mix and you have to take an RMD during those 10-year periods, you cannot add up your personal IRAs and your inherited IRAs and take one RMD. The IRS considers the inherited IRA RMD separate from your individual pre-tax IRA RMD.
Garrett: One thing you might not expect is that if you pull extra money from the inherited IRA, like if the inherited IRA RMD is $10,000 and you pull $12,000, creating a $2,000 excess, you cannot apply that excess to your personal IRA RMD.
Garrett: There's a lot going on there, but that is the difference between the accumulation side and the decumulation side of retirement where you have to take RMD complexity into consideration.
Adam: In previous episodes, you touched on how to get QCDs taken care of, and you mentioned three different methods. What does that look like once you have some of these different types of accounts? Give people some food for thought on what to do if you have a couple of different places to go. How should you approach taking care of your RMDs, and what's the best way to do that or good things to think about as you take care of your RMDs in 2026?
Garrett: Whether it's an inherited IRA or a regular traditional IRA belonging to you or your spouse, I still think these three most common techniques apply to a required minimum distribution.
Garrett: The first one might be the most fun: spend it all. Take that money, pull it out, pay the tax on it, and go on vacation or cover living expenses. If the government says you need to take out $20,000 from an inherited IRA, take it, spend it, and have a good time with it. That's a very easy option.
Garrett: Option two: you might not need all of that RMD. In this episode, we're talking about six-figure RMDs, for some people, a very large six-figure RMD. You start thinking about your Social Security benefit, deferred compensation, or rental properties. Maybe you don't need that RMD and don't plan to give it away. A lot of clients will take the excess over the amount they need and reinvest those RMDs. If you have a $150,000 RMD and need $75,000, you take the full $150,000, pay tax on it, spend $75,000, and reinvest $75,000 in a brokerage account.
Garrett: The third option, which is perhaps the most interesting from a tax planning side, is that QCDs are a great way to give money to qualified charitable organizations if you're over age 70½. Remember, 70½ is not your RMD age. What you might not have known if you stuck around this long in the episode is that an inherited IRA is still eligible for a QCD.
Garrett: If you have a $10,000 QCD from an inherited IRA or a traditional IRA, you can take that $10,000 and give it to a charitable organization. It's not taxable income to you or to the qualified charity, and it counts toward your required minimum distribution total. It's a great way to do your giving once you turn 70½.
Garrett: Big picture: if an annuity or inherited IRAs are in the mix, you can mix and match how you pull money out of an IRA to satisfy an RMD, but you'll want to have a pen and paper ready to make sure you know what you're doing and stay compliant with the IRS. The IRS will levy a 50% penalty on any missed RMD. There are ways to appeal that with a pretty good chance of success if you're trying to do the right thing, but regardless, an RMD is not something you want to mess up.
Garrett: If someone asks what the action point here is, it's the same action point almost every week. If you're a DIYer who loves these things, hopefully there's something said here that you didn't know before tuning in, and now you know you'll have multiple RMDs to figure out. On the other hand, that's what Adam and I do for clients. In October and November, we're reaching out to clients and making sure all these I's are dotted and T's are crossed with RMDs.
Adam: One final thought from me: I feel like RMDs are spoken about very negatively, like a tax torpedo coming to blow your retirement submarine out of the water when all this money starts coming in. From a tax standpoint, it can cause some headaches and complications, but we don't always give caveats. If we did, every episode would be four hours long.
Adam: I will say not all RMDs are bad. It's not all terrible things coming our way. The other episode we did was on the six-figure RMD, which some of you may be facing, how to mitigate six figures of forced income. But there is a world where out of $4 million, $3 million is in a brokerage account and $1 million is in an IRA, and all you have is Social Security with no pension or annuities. In that scenario, these RMDs are actually great for providing your income, and it makes sense not to mitigate them all, you spend your RMDs in retirement, save your brokerage money, and benefit from a step-up in basis upon inheritance.
Adam: I don't want anyone to hear this and think, "Oh my gosh, we hate RMDs, plan around getting your RMDs to zero, get all your IRA money out." Just be planning and thinking forward. Our hope is to build a library of resources so you feel equipped with more tools in your toolbelt to plan for the future.
Adam: Chime in down below in the comments, we try to get back to all of them. Throw your thoughts down below on RMDs and QCDs. How are you managing and calculating these? We'd love to be part of a community. Check out our website at retirementtaxmatters.com and check out the year-end tax planning checklist down below. It's the perfect time of year to download that, grab a cup of coffee or a pumpkin spice latte, sit on the front porch, and start hammering out your spreadsheet.
Garrett: Year-end tax planning guide, match made for fall. Exactly.
Adam: We're on YouTube, Spotify, and Apple. Like, subscribe, follow, all those things. We really appreciate you guys. It's been a ton of fun doing this and seeing the channel grow. My name's Adam Reed, this is Garrett Crawford, and we are Retirement Tax Matters.