These distributions are generally included in your taxable income. You can collect your annual RMD in a lump sum or in parts, perhaps in monthly or quarterly payments. However, delaying the RMD until the end of the year gives your money more time to increase deferred taxes. Either way, make sure to withdraw the full amount before the deadline.
An annual retirement plan means that you calculate and withdraw the minimum required distribution in a lump sum each year. For example, if you have an IRA lower than your total RMD, you can empty the small IRA and take the rest of the RMD from a larger IRA. If you have multiple IRAs, you must calculate each account individually, but you can deduct the total amount in RMD from an IRA or combination of IRAs. If you have multiple IRAs, you must calculate the RMD for each account, but you can deduct the total RMD from a single IRA or from any combination of IRAs.
While you can't reinvest the RMD in a tax-advantaged retirement account, you can keep it in a deposit account or reinvest it in a taxable brokerage account. An RMD is the minimum annual required distribution that you should start withdrawing from your retirement account after your 72nd birthday. However, reducing your traditional IRA balance reduces your future RMDs, and the money from the Roth IRA can stay there as long as you want. To calculate your RMD, divide your year-end account balance for the previous year by the IRS life expectancy factor based on your date of birth in the current year.
However, RMDs for qualified retirement plans or inherited IRAs must also be calculated separately and can only be deducted from their respective accounts. You must calculate your RMD for each IRA separately, but you have the flexibility to deduct your full RMD amount from a single IRA or from a combination of IRAs. While you can't reinvest your RMD directly into an IRA or a Roth IRA, if you have earned income during the year, you may still be able to contribute to one of these accounts.