RMD’s and annuitzation
My client is over 71, and has an IRA annuity with a lifetime income guarantee. He is considering annuitizing the contract, which would eliminate that contract from the RMD list as it will no longer have an account value.
It is my assumption that the annuitized distributions cannot be counted towards meeting the RMD’s of OTHER IRA accounts. Is that correct?
Permalink Submitted by Alan - IRA critic on Wed, 2015-02-25 04:26
Yes, that is correct except in the year of annuitization since the annuity IRA did have an account balance on the prior 12/31. For all subsequent years, the annuitized IRA must separately meet the RMD requirements for annuities or DB plans, and the other accounts with year end balances must meet their RMD requirements in the usual manner. There is no RMD aggregation permitted between the annuitized IRA and any other IRAs. The client should be sure to request that the annuity conditions meet the IRS RMD requirements, and those do permit period certains to exceed the client’s life expectancy of joint life expectancy with the beneficiary.