RMD based on Death Benefit + Contract Value
I have a client who has just about depleted his IRA in and annuity. His contract value is $330, and his death benefit is $19,700. His RMD is based on his contract value and his death benefit, which is $947.78. Since he only has $330 left in the contract, can he take that only to satisfy the RMD? Will the IRS know why he took less than the amount required?
Permalink Submitted by Alan - IRA critic on Thu, 2014-01-23 17:24
It will not be a problem if he drains all his IRA accounts. I assume he has no additional TIRA accounts.
Permalink Submitted by Julie Brangenberg on Fri, 2014-01-24 14:10
No he doesn not.
Permalink Submitted by Julie Brangenberg on Fri, 2014-01-24 15:23
Will the IRS see the RMD required, including the db? If so, how will they know he is in compliance if he only takes what is remaining in the account?
Permalink Submitted by Alan - IRA critic on Fri, 2014-01-24 15:46
The insurer states the year end value of the IRA in January of each year. The death benefit is only included in that value if there are other fringe benefits of considerable value with the annuity. The client can check his prior year statement and the statement he receives this month to determine the amount if the value stated includes that death benefit. If it does, the insurer should be asked why. He certainly cannot distribute any more than he has, and even in the unlikely chance the IRS ever asks about this, his explanation should eliminate the chance of any penalty.