Secure 2.0 Section 204

Submitted by James E Cobb on Thu, 2024-02-01 19:32

How to identify the proper year end valuation of an annuity, in order to allow the annuity overage payment
to offset the RMD from other IRA accounts? In looking at the current statement the commuted Value is displayed. Is this the value I can use to calculate the RMD on the Annuity ?



Submitted by Alan - IRA critic on Thu, 2024-02-01 20:35

  • Since Sec 204 indicates that you can use any reasonable method for the present value of the annuity, the commuted value would seem acceptable until the IRS updates the Regs requiring insurors to provide the account value for the annuity and provide it to IRA owners by late January, so that IRA owners can determine their total IRA RMD for all IRA accounts, subtract the annuity payout and take the balance out of non annuitized IRAs. Sec 204 was also included to encourage DC plans to provide more “lifetime income” options. 
  • Prior to this provision, generally acceptable procedure would be to treat the annuity payments as RMDs for the annuity only and the non annuity IRAs would separately have to handle RMDs under the usual rules. But since the annuity payments were usually higher than the normal RMD calculation, there was no way to reduce the rest of the RMD for the excess. When interest rates are high, as there are currently, the commuted value would be lower reducing the present account value and the implied RMD for the annuity. When interest rates drop, this trend will reverse.

Submitted by Stuart Koop on Mon, 2024-02-19 18:18

Under Sec 204, can IRA annuities and 403b annuities be combined with the IRA market value to determine the total market value?

Submitted by Alan - IRA critic on Mon, 2024-02-19 18:42

No. 403b RMDs and IRA RMDs must be entirely calculated and distributed separately from each other, even though they both can be separately aggregated with other such same type accounts when completing the 403b RMD and the IRA RMDs.

Add new comment

Log in or register to post comments