Annuity Draw as a RMD
I have a client who is turning 73 this year and thus must take his first RMD. He has a traditional IRA and also an IRA he has thru an annuity. He has been drawing on that annuity for the past few years in the sum of $22k as part of his income rider to help with his retirement.
My question is, now that we must take an RMD from all of his IRAs, can we use that $22k as part of his total RMDs or is that separate and must continue on its own merit.
His IRA is worth $700k so he must take $26,415 out of that. (factor 26.5 for a 73 year old)
His annuity IRA is valued at $317k so he would have to take $11,963
Total RMD = $38,378.
Can we factor that $22k annuity payment towards this so he only needs to take $16,378 from traditional IRA or does he need to take the full $26,415 as the annuity IRA is treated separately as he initiated the income feature on it.
Thanks
Permalink Submitted by Alan - IRA critic on Thu, 2024-05-23 17:16
Yes, the annuity distributions count toward the total RMD and the total RMD can be completed in any combination between the 2 accounts. But note that the insurance company will have to provide the annuity RMD amount because the determination of the prior year end value (317k in your example) may require a complicated calculation to determine the value of certain annuity fringe benefits. That calculation will have to be provided by the insurance company.