RMD’s

Submitted by will adamczyk on Fri, 2018-02-16 18:01

I have a client that has 3 IRA’s. The first one we elected a settlement option that would pay him an income for 10 years then stop.

Then the other 2 IRA;s we were going to let accumulate and not take the RMD’s from as the IRA that is in the 10 year settlement option more than satisfies the amount of all 3 RMD’s…

I have been told that the IRA that is in settlement option does not count towards the total RMD amounts and he must take out the RMD’s from his 2 other IRA’s. he just turned 70. So is that correct?



Submitted by Alan - IRA critic on Fri, 2018-02-16 19:54

What do you mean by “settlement option”?  Is this simply an IRA annuity owned by the client that he elected to annuitize for 10 years?

Submitted by will adamczyk on Tue, 2018-03-06 00:41

yes.  do those annuity payments count towards satisfying his RMD?  since he has taken an annuity payment the insurance compnay does doe calculate a new RMD each year for him as it is in a payout mode, yet none of that money has ever been taxed so it seems that it certainly out to count towards overall RMD’s. In this case the amount he is receiving more than satisfies the other 2 IRA RMD’s. 

Submitted by Alan - IRA critic on Tue, 2018-03-06 00:58

His annuity payout will only satisfy the RMD for the annuity IRA, not the others. He no longer has a year end account balance for the annuitized IRA from which to determine an RMD. Therefore, his payout is all considered to be the RMD for that account since the period certain appears to have run through year 70.5. Since the distribution is the RMD, none of it is eligible for rollover. Note that this conclusion is just a consensus conclusion because IRS Reg 1.401(a)(9)-6 does not clearly address this question.

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