Switching RMD to Joint and Last Survivor Annuity
Joe Smith is taking RMDs from an IRA held in a deferred, fixed annuity. He is married. It is not known whether he does his RMD calculation using the single-life table or the joint-life table. He wants to do a direct rollover from the deferred, fixed annuity to an immediate, joint and last survivor annuity. Is this permitted for both methods of currently calculating his RMD? If it is permitted, then does it have any adverse tax consequences and does he have to take his 2014 RMD before doing the direct rollover in 2014? Is the answer the same for both a traditional IRA and a Roth IRA?
Permalink Submitted by Alan - IRA critic on Thu, 2014-05-01 20:18
There are no RMDs for a Roth IRA. He could transfer the TIRA to the immediate IRA annuity without taking his RMD for the current year, but between the original IRA account and the annuity, the total RMD must be satisfied. Since the Uniform Table or joint life table if spouse is more than 10 years younger applies for current RMDs, use of the single life table would result in taking out much more than needed. After the first year for the immediate annuity, the distribution will satisfy the RMD for that IRA account, but it is likely to be higher than the usual RMD the closer he is to 70.5 because the payouts are the same for each year rather than increasing each year under the Uniform Table.