Trad IRA Annutiy with lifetime income
Trad IRA for owner over 75 years old has an annuity with lifetime income. The account value of the annuity is now $0, but continues income payments. How is the $0 account balance treated for the total IRA Balance to calculate RMD and does the income from the annuity get treated any differently – ie Can is still be withdrawn from the IRA, counting toward the RMD?
Thanks
Permalink Submitted by Alan - IRA critic on Tue, 2024-05-14 15:58
The insurance company must include the actuarial present value of additional benefits (the lifetime income) in determining the RMD for each year. This is a complex calculation done by the insurance company, after which the RMD for the annuity should be provided to the IRA owner. That RMD can then be aggregated with the RMDs for other IRA accounts and that RMD will be satisfied by distributions in any combination from any of the IRAs.
Accordingly, the owner of such an IRA annuity will not be able to determine RMDs on their own. They will have to be provided with the annuity RMD by the insurer.
Permalink Submitted by Neal Gordon on Tue, 2024-05-14 16:20
Thank you, Alan