FMV ON VARIABLE ANNUITY

Submitted by Anthony Racz on Thu, 2023-12-21 10:52

I have a Variable Annuity. How can I determine if the FMV reported on my 5498 is correct, as it is needed to determine an RMD?

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Permalink Submitted by Alan - IRA critic on Thu, 2023-12-21 16:34

You probably can’t. With this type of annuity in an IRA, there are 3 methods the insurance company can use to determine the FMV at the end of each year. All of these methods are highly complex, and may include some value for fringe coverages in the VA. It would be difficult for you to check it, even if you were provided with a print out of their calculation. See QA 12 in the following Reg for the basic rules:
eCFR :: 26 CFR 1.401(a)(9)-6 — Required minimum distributions for defined benefit plans and annuity contracts.

Permalink Submitted by Anthony Racz on Thu, 2023-12-21 16:53

Thank you for your prompt reply. I will read the article you recommended. Unfortunately, that’s what I keep reading (I probably can’t because it’s too complex with a variable annuity). However, my concern is that the high FMV they keep providing compared to the actual acct value will result in some significant RMD’s (pushing me into higher tax brackets) when that time comes and will also rapidly reduce my acct value. Ahh the tradeoffs for a guaranteed income and the high fees for the GMIB rider!

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