immediate annuity and rmd’s
this is in addition to similar question posted…I will be 70 1/2 april 2017…my IRS life expectancy is 85…I am considering buying an immediate annuity..period certain 20 years…told by annuity company that the rmd is already accounted for with the payment and I will get a 1099R year end showing total payments for the year, which qualifies as the RMD for the annuity and is declared as ordinary income…if I pass away, the beneficiary receives any additional payments to the end of the 20th year, and declared as ordinary income….Alan you have helped me in the past, appreciate a response. thanks in advance….gerry
Permalink Submitted by Alan - IRA critic on Wed, 2016-03-30 19:20
This is correct with respect to the annuity RMDs, which I assume is an IRA annuity. If you have other non annuitized IRA accounts, those accounts must satisfy the RMD separately from the IRA annuity. There are some highly complex rules regarding term certain annuitization that relate your age, the beneficiary’s age, and the length of the term to make sure that the annuity pays out at a fast enough rate each year to meet the IRS RMD Regulations. This determination is best left to the insurance company, but I suggest letting written confirmation from them that this annuity as proposed will comply with the IRS rules for DB plan and annuities under Reg 1.401(a)(9)-6.
Permalink Submitted by gerard noronha on Wed, 2016-03-30 21:18
Allan…thanks…I will make sure insurance complies with reg 1.401 (a) (9)-6 in writing….gerry