Do I need to pay Required Minimum Distribution for 2021 if no funds at end of 2021?
I currently have an IRA made up of annuities in TIAA. I plan to annuitize these funds in December and begin monthly lifelong payments. Thus in December the funds will be turned over to TIAA and I will no longer have this account. I have been told different things, one, that since I do not have an account at the end of 2021, I do not owe a Required Minimum Distribution for 2021, and, two, since I did have an account at the beginning of 2021, I do owe a Required Minimum Distribution for 2021. Which is correct? Also, is there written documentation I can show the IRS if the RMD is not necessary? Also, my first monthly annuity payment in December, would not be enough to cover a RMD if it is necessary for 2021. Thank you.
Permalink Submitted by Alan - IRA critic on Thu, 2021-09-23 20:37
If you are RMD age, a 2021 RMD is calculated from your 12/31/2020 IRA annuity balance, and the same goes for any other non annuity IRAs you own. The year end 2021 balance is immaterial with respect to 2021 RMDs. Since you will annuitize this year, any annuity distributions made this year will count toward your 2021 IRA RMD. After 2021, the annuity payments BECOME the RMD for the annuity account only, and it will no longer have a year end balance. If you have other non annuity IRAs, after 2021 the RMDs for those IRAs are figured and distributed without considering the TIIA annuity and these accounts are walled off from each other.
Permalink Submitted by Robert Whitehead on Fri, 2021-09-24 02:38
Thank you. That is very helpful. It was not the answer that I was hoping for but at least now I know that I need to pay the RMD for 2021.