Elderly client, 92, has $160,000 CD IRA. She wants to spread out the taxes today and more especially when only daughter inherits the excess. [There is a large NQ annuity with $200,000 of tax liability for daughter to inherit, so the family wants to spread out the taxation at the death of the mother. The current insurance company will allow annutization over 10 or 15 years as an inheritance method.] The current IRA CD kicks out 1/12 of the RMD each month. The SPIA ten year period certain she wants to use will distribute more each month than the monthly CD is generating for the remainder of the year.

Question: Since the dollar amount of the combined withdrawal – 1/2 from the CD more that 1/2 from the SPIA – will exceed the RMD for 2010, will she be covered in making her RMD for 2010? OR should she withdraw the total RMD and then begin the SPIA withdrawals in 2010 or wait to 2011?

No insurance company will touch a 92 year old to set up a stretch IRA to the daughter after the Mom’s death. Bank refuses to “stretch” the IRA beyond 5 years. One company will SPIA the IRA for 10 or 15 years starting in June 2010. This is acceptable to all involved, but how does she make the correct RMD for 2010?