Can I Withdraw More Than the RMD From My IRA?

Yes, you can withdraw more than your Required Minimum Distribution (RMD) from an Individual Retirement Arrangement (IRA). The Internal Revenue Service (IRS) mandates a minimum amount that must be withdrawn annually once you reach a certain age, but it does not set a maximum limit. While there is a penalty for failing to take your full RMD, no such penalty exists for taking a larger distribution.

Tax Consequences of Additional Withdrawals

Any distribution from a Traditional IRA is treated as ordinary income for the year of the withdrawal. This applies to both the RMD amount and any funds taken out in excess of that minimum. The withdrawal is added to your other income, such as pensions and Social Security, to determine your total taxable income for the year.

A larger-than-required withdrawal can impact your overall tax liability. For instance, taking an extra $10,000 from your IRA could push you from the 22% federal income tax bracket into the 24% bracket. This increase in your adjusted gross income (AGI) can also affect the taxability of your Social Security benefits or your eligibility for certain deductions and credits.

The penalty for failing to take your full RMD is 25% of the amount not withdrawn, which can be reduced to 10% if the shortfall is corrected promptly. In addition to federal taxes, most states with an income tax also tax IRA distributions, so a larger withdrawal will increase your state tax bill.

Impact on Different IRA Types

The rules for withdrawals above the RMD apply to Traditional, SEP, and SIMPLE IRAs. Taking more than the required minimum reduces your account balance, which affects future years. A smaller account balance means less capital for tax-deferred growth and will result in smaller calculated RMDs in subsequent years.

Original owners of Roth IRAs are not required to take RMDs during their lifetime, so the concept of withdrawing more than the minimum is not applicable. Qualified distributions from a Roth IRA, those made after the account has been open for five years and the owner is over age 59½, are entirely tax-free.

Beneficiaries of both Traditional and Roth IRAs are subject to RMD rules. If you inherit a Traditional IRA, any withdrawal you take, whether it is the RMD or an additional amount, will be taxable as ordinary income. For an inherited Roth IRA, distributions are tax-free, provided the account meets the five-year holding period, even when the withdrawal exceeds the beneficiary’s RMD.

Reporting Withdrawals on Your Tax Return

After the end of the year, your IRA custodian is required to send you Form 1099-R. This form reports the total amount you withdrew from the IRA during the year and does not distinguish between the RMD and additional withdrawals. The gross distribution is shown in Box 1, and the taxable portion is shown in Box 2a.

You will use the information from Form 1099-R to complete your federal income tax return, Form 1040. The total distribution from Box 1 is reported on Line 4a, and the taxable amount from Box 2a is reported on Line 4b. If you have made nondeductible contributions to your Traditional IRA, you must file Form 8606, Nondeductible IRAs, to calculate the nontaxable portion of your withdrawal.