Mistake: Combining RMDs With Your Partner

As a married couple, you can have many financial assets together. But retirement accounts aren’t among them. These must be owned separately. That individual responsibility also applies to taking RMDs.

But sadly, couples frequently miss this distinction, especially if they file taxes jointly. As they file a single combined tax return, they assume that an RMD taken from one spouse’s retirement account will also satisfy the RMD on the other’s.

Let’s say you both face distributions and take the full combined portion of those RMDs out of your partner’s IRA. Taking your RMD from your mate’s IRA has many tax consequences. As far as the IRS sees it, you’ve missed taking your RMD.

They can impose an excise tax of up to 25% on that RMD amount. Meanwhile, your spouse will have “overdistributed” by taking more from their account than was necessary, which probably means paying more taxes. If you quickly correct the error, that tax can be reduced to 10%.