Going from annual RMD calculation to annuity
The age70+ owner of a traditional IRA is using the Uniform Life Expectency Table (the table with a divisor of 27.4 for age 70) to calculate his RMD each year [b]on a single life basis[/b]. He wants to do a trustee to trustee transfer this traditional IRA to an immediate annuity with an insurance company. Will purchase of a joint and last survivor annuity with his wife as beneficiary, as opposed to a single life annuity satisfy the minimum distribution requirements?
Suppose that he has another traditional IRA in a brokerage account, that he is [b]not[/b] rolling to an annuity. When he calculates his 2010 and future RMDs, does he use the balance of that IRA only, or, does he have to add the end of prior year balance of the annuity to the IRA in the brokerage account and divide the sum by the Uniform Life Expectency Table divisor?
Permalink Submitted by Alan Spross on Wed, 2009-11-18 21:23
In the year the immediate annuity is purchased, there was a prior year ending balance to calculate the RMD. The annuity payouts count toward the total RMD. However, in subsequent years there is no longer a year end balance for the annuitized amount. For these years, the annuitized payment will satisfy it’s own RMD and the remaining balance will be used to determine the RMD for the other assets, so they can no longer be effectively aggregated.