IRA annuity rule if still working at 70 1/2
IRA Annuity purchased at age 70 1/2+ with money earned from working. Is that annuity invalid because she was 70 and 8 months? Is there a penalty bacause it wa purchased?
IRA Annuity purchased at age 70 1/2+ with money earned from working. Is that annuity invalid because she was 70 and 8 months? Is there a penalty bacause it wa purchased?
Permalink Submitted by Alan Spross on Sat, 2008-04-12 02:36
Were the IRA funds created by a rollover from an employer plan? Someone age 70.5 cannot make a regular TIRA contribution, but could make a Roth contribution.
IF the funds used to purchase the annuity were not an excess contribution, then there should be no penalty, but the RMD requirements would still need to be satisfied. For an immediate annuity, the annual payments would meet the RMD requirement for subsequent years, but for the initial year, the RMD would need to be satisfied in combination by both the annuity distribution and a supplemental distribution from other funds.
If the annuity is a deferred annuity, then the RMD is figured as usual except that the values of certain fringe benefits in the annuity must be calculated by the insurance company and added to the account balance before determining the exact amount of the RMD.
These statements are general, and make not reflect the details underlying your post. If so, please advise.