Period Certain Annuity Required Minimum Distribution
An individual has two IRA’s. The individual is 72 years old. One account is a securities account for 100K. The other account is a 5yr period certain annuity with an original investment of 100K at age 68. The distribution from the period certain annuity is obviously large enough to cover the distribution on a single IRA as large as these two totaled. My question is as follows, does the distribution coming from the annuity meet the RMD’s for the individual or must they also take a distribution separately from the securities account?
Permalink Submitted by Alan - IRA critic on Thu, 2012-12-20 18:58
The real question is how much of the period certain distribution is considered to be the RMD. The IRS Regs regarding period certain annuitization are extremely vague, except when the period is too long. The safe conclusion here is that the entire distribution became the RMD for that account in the year the individual reached 70.5, preventing any portion of the distribution from satisfying the RMD for other IRAs OR being available for rollover. Remember that there is no longer an account balance at year end for this contract on which to calculate the RMD in the usual manner and there is no authority for the insuror to calculate a present value for the income stream to act as a year end value. What does the insurance company say about this, since they are responsible to determine the RMD on this contract and advise the annuity owner??