aggregation capabilities for gmib payouts on index annuities
If a client has a qualified index annuity with an income rider and the client elects to turn on their guaranteed lifetime income benefit, will that payout be able to be aggregated with other IRA RMDs? I know this can not be done on an annuitization but my understanding is that this is not in fact annuitizing the contract but taking withdrawals. If in fact this can be aggregated, then a follow up question would come to mind. What happens if and when the underlying account value goes to 0 and the client is still entitled to income under the rider benefit?
Permalink Submitted by Alan - IRA critic on Thu, 2016-02-11 21:27
As long as the annuity has a year end value reported on Form 5498 by the insurer, the RMDs can be aggregated with other non annuity IRA accounts. If the value going to 0 results in actual annuitization to pay the gmib then there will no longer be a year end value, aggregration would end, and the payments would constitute the RMD for the annuity only.