RMD From a VA with Living Benefit
I am calculating the RMDs for a client and one of his IRAs is invested in a VA with an Income Benefit Rider. The VA company is calculating the amount on the Protected Income balance and not the current balance at 12/31/2017.
This is the only Insurance company performing the calculation in this manner. Can you tell me which way is correct?
Permalink Submitted by Alan - IRA critic on Tue, 2018-02-13 23:10
IRS RMD calculations for IRA annuties must reflect the value of fringe benefits in addition to the cash value of the annuity. Therefore, the calculation can usually only be done by the insurance company. There are exemptions, for example if the only additional value is a death benefit, it can be overlooked and the cash value used. But other additional benefits in addition to a large death benefit will often trigger an RMD in excess of the RMD using only the year end cash value. I understand that companies are also loath to provide a copy of the actual calculation to the IRA owner to check. For the complex details of the IRS Reg, google IRS Reg 1.401(a)(9)-6.