rnd
Here are the circumstances. Rollover IRA (all tax deferred).
Purchase a fixed immediate annuity within the IRA using a portion of the total IRA
What is the RMD as regards to the two halves; The annuity and the remaining portion of the IRA?
Or, are they treated as one entity for RMD purposes?
Permalink Submitted by Alan Spross on Wed, 2009-09-09 22:11
Before you reach your first RMD year, you should separate the immediate annuity into it’s own IRA account. Then the annuity payout (with some limitations) will meet RMD requirements for that account, and your other IRA account(s) develop their own RMD from the account balance. Once you start an immediate annuity, there is no account balance for that portion, and the IRS has not approved using a present value of the annuity contract for the purpose of arriving at a total account balance.
For the year of annuitization only, you still have a prior year end total account balance which will determine the RMD for a combination of the annuity payout and the remainder of the IRA. But that only works in the year of annuitization, so the annuity should be separated prior to the end of that first year.