RMD more than account value
I took over a Prudential VA that has a death benefit higher than the cash value, stemming from very poor performance during the credit crisis. The RMD the company calculates takes this death benefit into account so the RMD is higher than the actual cash value would oversize indicate. The RMD will deplete the contract in 2022 and she’ll lose that extra death benefit. This is her last remaining IRA. She is 81 and not in good health.
Do I not take the RMD and risk a penalty? She has no income in order to do a contribution.
Any thoughts appreciated.
Permalink Submitted by Alan - IRA critic on Tue, 2021-08-03 21:46
Are you sure that the calculated RMD amount is correct? Are there other ancillary benefits beside the death benefit? If so, and the RMD exceeds that calculated using the year end value, if she does not take the year of death RMD, the beneficiary acquires that responsibility. I suppose she could always play the audit lottery, but it would not be proper for me to comment on the chances of that working. The IRS will not approve the waiver of the 50% penalty until the late RMD has been distributed.