RMD (multiple IRAs & annuity)

Submitted by ShipsnGiggles on Thu, 2015-02-12 22:01

I am unclear of the RMD rules when an individual owns 2 or more IRAs – one of the IRAs purchased an annuity

Here are the facts as they were presented:

T-IRA owner turns 70 1/2 in 2015 – his IRA contains an annuity which has yet to be annuitized. Client is aware he must take his initial RMD in 2015 or defer to April 1 2016. This is his only IRA (“IRA #1”.

Client doesn’t want any future RMDs to be taken from this IRA (#1).
He is considering rolling an old 403(b) account to an IRA (#2) (to be invested in mutual funds).

Can the 2016 and subsequent RMDs associated with IRA #1 (annuity)be taken from a separate IRA? I’m aware RMDs have to be calculated for each IRA owned but the total amount can be taken from one or more account.

Thank you



Submitted by Alan - IRA critic on Thu, 2015-02-12 23:58

  • Yes, under the aggregation rules for IRA RMDs, the total RMDs for all IRAs can be withdrawn in any combination from available accounts. That would include a rollover IRA that did not exist the prior 12/31 and does not have it’s own RMD, as a distribution from that rollover IRA could be used to satisfy the RMD from other owned IRA accounts.
  • Should the annuity IRA be annuitized in the future, for years following the year of annuitization the IRA annuity will no longer have a prior year end balance and the annuity payout will only satisfy the RMD for the annuity IRA. The other IRAs with account balances will separately satisfy their own RMD requirements and aggregation between the two will no longer apply. It is also vital that any annuitization meet the requirements under the IRS Regs for RMDs and they are complex.

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