Retirement Retirement Planning

Most People Think 401(k) and IRA RMDs Work the Same Way - Here Are the 2 Big Differences

Knowing what they are could save you from big penalties.

By Catherine Collins , Edited by Laura Hohenstein

Updated Oct. 2, 2026

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If you have more than one type of retirement plan, like a 401(k) and a traditional IRA, making sure you follow all required minimum distribution (RMD) rules can be confusing. After all, some retirement accounts are similar but have slightly different requirements. For that reason, it's easy to make a mistake, which unfortunately comes with hefty penalties.

So, to avoid making errors, here is more information about RMDs. This includes the two main differences when taking distributions from 401(k)s and traditional IRAs and the penalties if you don't take them.

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What is a required minimum distribution (RMD)?

A required minimum distribution, commonly called an RMD, is the amount the federal government requires retirees to withdraw from specific types of retirement accounts, like 401(k)s and Traditional IRAs. Because these accounts are tax-advantaged, eventually account holders will need to withdraw money in order to pay taxes. As of 2026, RMDs start when you turn 73, though it will increase to 75 in the future.

Roth IRAs and Roth 401(k)s do not have RMDs. Rather, you contribute to Roth accounts with after-tax income and can withdraw from them tax-free in retirement as long as you meet certain qualifications.

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Your 401(k) and traditional IRA follow similar RMD rules

Both 401(k)s and traditional IRAs have RMDs, and there are some similarities when it comes to RMD rules. For example, both accounts base your RMD amount on your account balance on December 31 of the previous year. Both accounts also allow you to delay your first RMD if you choose.

However, there are also some important differences when it comes to actually making your RMD payments.

You can combine IRA RMDs

If you have several IRAs, which is common if people switch jobs and roll over 401(k)s, you don't have to withdraw an RMD from each IRA you have. Instead, you can withdraw one large amount from one IRA, and that will satisfy your RMD requirement for your Traditional IRA. 401(k) accounts are a little bit different, though.

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You cannot combine your 401(k) RMDs

If you have more than one 401(k), RMDs work slightly differently. Unlike with traditional IRAs, you cannot combine your RMDs by taking a large amount out of only one of your 401(k)s. Instead, you have to take an RMD from each 401(k) you have in order to meet federal requirements.

Your IRA RMDs don't count towards your 401(k) RMDs

Another important caveat is that your IRA RMDs can't count towards your 401(k) RMD requirements and vice versa. For example, if you have to make a $5,000 IRA distribution and a $5,000 401(k) distribution, you cannot make a $10,000 distribution from one account. In order to avoid penalties and fines, you have to follow the specific RMD instructions for each type of account.

You can delay 401(k) RMDs if you're still working, not IRA RMDs

Another interesting exception is that if you want to keep working past the RMD age, you can delay taking an RMD from your 401(k) but not your traditional IRA. This exception only works if you don't own more than 5% of the company you work for. With an IRA, however, you have to start taking your RMDs when you reach RMD age.

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There are penalties for not following the rules

It's important to stay up-to-date with RMD rules because there are actually steep penalties if you don't withdraw the correct amount.

If you don't make an RMD, you may have to pay a 25% excise tax on the amount you should have taken out. However, if you correct the mistake and withdraw it within two years, that tax drops to 10%.

Consult a financial advisor and an accountant if you have questions

Retirees have to make many decisions when it comes to RMDs. For example, many people aren't sure whether or not to delay their first RMD until the following year. However, information from Fidelity explains that delaying your first RMD can create two RMDs the following year, which may increase the taxes you owe.

Meeting with a financial advisor and an accountant can help if you're unsure of the next steps to take or how to properly manage your RMDs.

Bottom line

Your 401(k) and Traditional IRA have many similarities, even when it comes to RMDs. However, there are two important differences that matter.

In order to avoid making a financial mistake, take the time to review the fine print. Making accurate distributions from your retirement accounts can prevent you from owing penalties and extra taxes in the future.

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