IRA and annuitization
I have a client with several IRA accounts. If we annuitize one of the accounts, do those payments count toward satisfying the RMD’s for that year? Or are the payments in a different category, pension, etc.?
What about calculating RMD’s in future years? What is the value used to calculate the future payments as of 12/31/xxx of the asset value providing the payments?
Permalink Submitted by Alan - IRA critic on Wed, 2022-02-09 15:51
The annuity IRA distributions count toward the total RMD only in the year the annuity is purchased. In subsequent years, the annuity distribution satisfies the RMD for the annuity IRA only, and the non annuity IRAs are separate and determined without regard to the annuity IRA. Since the annuity IRA will not have a year end value after purchase, there is no way to calculate the RMD for the annuity, therefore the distributions from an annuity structured to meet IRS requrements will meet the RMD requirement. The IRS has not authorized any present value option to be used as a surrogate for a year end value of the IRA annuity.