Rollover of an IR annuity distribution to a traditional IRA

Submitted by Thomas Gramins on Thu, 2009-02-05 18:30

If a client has a GMIB (Guaranteed Minimum Income Benefit) provision in his IRAnnuity, can he take his annual payments from the annuity and deposit them in a traditional IRA within 60 days (not using the GMIB payment as his RMD) and then take his RMD from his traditional IRA?

My understanding with IRAnnuities is that to do a rollover (trustee to trustee transfer) the entire contract would have to be surrendered which defeats the purpose of having the GMIB provision.



Submitted by Alan Spross on Thu, 2009-02-05 19:39

No, in a rollover situation, the first distribution is deemed to satisfy the RMD and therefore cannot be rolled over. Alternatively, if an unreported direct trustee transfer is done, you effectively sidestep the distribution. There is also the disadvantage of using up the one rollover permitted over a 12 month period per account.

Does the client have another TIRA that can satisfy the RMD for both?

Submitted by Al Fry on Thu, 2009-02-05 20:50

Not sure what you are trying to accomplish. Why take the RMD out of the annuity, put in in an IRA, then take it back out? GMIBs are generally RMD-friendly, so if the RMD exceeds the w/d benefit, it should not destroy the guarantee. If the w/d benifit exceeds the RMD, you are not required to take it. However, if you did, the excess COULD be rolled over. Or you could take out the RMD, then have the excess transferred to your other TIRA (if they will do it). As Alan said, you should avoid rollovers when possible, because of the one-per 12 months rule. Al

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