rmd required but no funds avaible
i will be turning 70 1/2 this year . One of my annuities that requires a rmd has no funds available to make a dist . Even tho I will be receiving no cash from this annuity will i be lliable to taxes due for the rmd .
Permalink Submitted by Alan Spross on Fri, 2008-01-18 02:53
Tell the annuity company that they must make funds available for RMD purposes under the IRS tax code. They know your age and that all taxpayers are subject to RMD requirements by their required beginning date at the latest.
They may attempt to charge you with a surrender charge, but if they threaten you with that, tell them you will have your state insurance department look into the practice.
You are not taxed on RMDs not distributed, however you could be penalized by an excess accumulation penalty. You could use that issue to put more pressure on the annuity company by requesting a letter from them explaining why they cannot issue your RMD so that you could use that letter to have the IRS waive the penalty. That way, you either get your RMD issued or have the written documentation that the IRS will most certainly accept to waive your penalty. The annuity company may also not want the IRS to see such a letter.
Bottom line is that you are either getting incorrect information from the annuity company or they have a policy of abusing comsumers, and they should not be allowed to get away with it. You would think that the current investigations into annuity sales practices would be enough of a red flag to these companies, but perhaps not……..
Permalink Submitted by JAMES MATHIS on Fri, 2008-01-18 16:40
since i have another annuity , A much small one than this one in question would this perhaps force me to take out excess funds to pay taxes on the non paying annuity ?
Permalink Submitted by Alan Spross on Fri, 2008-01-18 17:05
Yes, if you have more than one IRA account, you can satisfy your total RMD from any combination of these accounts you wish. However, note that the RMD for any particular annuity may could be based on a value higher than the cash value due to recognition of the value of fringe benefits in the annuity. The insurance company would have to provide you with the 12/31 value on which the RMD would be based. You could then total this value for all your IRAs and satisfy the RMD from any one or combination of the accounts.
Permalink Submitted by Al Fry on Fri, 2008-01-18 17:57
Most all annuities with quality companies are “RMD-Friendly”. That means they should allow you to take the RMD out without penalty.