SPIA as an IRA

Submitted by Michael Jones on Thu, 2018-03-22 14:47

If you create a SPIA as an IRA and transfer IRA assets into the SPIA, and you begin taking income immediately, does the income that you take that year qualify for the RMD that you were supposed to take from the assets that were transferred into the SPIA?



Submitted by Alan - IRA critic on Thu, 2018-03-22 16:20

  • Yes, since all IRA assets had an account balance on the prior 12/31, the RMD amount for the year of IRA annuitization can be determined in the usual manner. The RMD for the non annuitized balance would be this total RMD reduced by the amount of the IRA SPIA annuity distributions. For subsequent years, the IRA annuity will not have a year end balance, therefore the IRA SPIA distributions will satisfy the RMD for the annuity contract only and the non annuitized IRA balance will separately have to meet the RMD determined by the prior year end value of that balance. In summary, for the year of annuitization only, the RMD can be satisfied using the RMD aggregation rules, after that the RMDs for the IRA annuity and other IRAs are totally separate.
  • It follows that if you were to annuitize your entire IRA balance, you would need to determine if an amount must be left out of the annuity in order to complete the RMD for that year.

Add new comment

Log in or register to post comments