Retirement tax questions

Thank you very much for your quick and concise answer. I would not be stressed out if my former employer would explain it as you did.

Yes, I received 3 forms 1099R which are exactly as you have described.

By the way, my former employer does not provide us a plan agreement specifies how the RMDs will be satisfied, and neither do they allow us to provide any explicit instruction on the RMDs, only asked for the direct over IRA/Roth IRA brokerage firm and account numbers. The Distribution document they sent did not mention these at all, other than lump sum distribution is required with the RMD.

Last December I had looked up the IRS publication on defined plan distribution. It seems to me that the RMD for Designated Roth Account is to be done separately.

Below are the extracts for the designated Roth accounts I found on the IRS publications on Defined Plan distribution. Please correct me if I misinterpret it.

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• https://www.irs.gov/pub/irs-pdf/p4530.pdf 
• IRS RMD FAQ  

https://www.irs.gov/retirement-plans/retirement-plans-faqs-regarding-required-minimum-distributions#...

• A designated Roth account is a separate account under a 401(k), 403(b) or governmental 457(b) plan: 

        ‧ to which designated Roth contributions are made, and 

        ‧ for which separate accounting of contributions, gains and losses is maintained. 

• Q. Does my employer need to establish a new account under my 401(k), 403(b) or governmental 457(b) plan to receive my designated Roth contributions?

         A.Yes. Designated Roth contributions must be kept completely separate from previous and current 401(k), 403(b)

             or governmental 457(b) pre-tax elective contributions. Your employer must establish a separate account for

             each participant making designated Roth contributions.

• An advantage of a designated Roth account is that you pay tax on your contributions now, but later, when you receive a qualified distribution from the account, it’s tax-free. Less tax on your plan distributions could mean more money in your pocket during your retirement.

• Defined Contribution Plans

         If you have more than one defined contribution plan, you must calculate and satisfy your RMDs separately for each

         plan and withdraw that amount from that plan.

• How are RMDs taxed?

         The account owner is taxed at his or her income tax rate on the amount of the withdrawn RMD. 

• Similar to a Roth IRA, qualified distributions from a designated Roth account, including all earnings, are tax-free. 

• Required minimum distributions

         Designated Roth accounts are subject to the required minimum distribution rules.

• If an account owner fails to withdraw a RMD, fails to withdraw the full amount of the RMD, or fails to withdraw the RMD by the applicable deadline, the amount not withdrawn is taxed at 50%.

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Obviously “The tax code and regulations permit the combined RMD to be taken in any combination from either of the accounts” were not on the above IRS publications. Would you direct me to the specific IRS publication that would reference and detail this rule?

In regards to #2 on your reply:

“If your intent was to have the entire RMD satisfied by taking funds from the traditional account, you can somewhat recover by doing a partial Roth conversion in 2023 from the traditional IRA to the Roth IRA.“  This suggestion would make my tax return much easier.

Thank you for your help. 
Sara