1: RMD age 70-1/2 quarterly, monthly, annually? 2: March 31 1949 when am I eligible?

Submitted by sandi tompson on Wed, 2019-09-11 01:39

Hello. This year I have a small annuity from a masterdex 10. I will be 70-1/2 in October (birthdate is 3/31/49). My question is
if I choose quarterly RMD: The second quarterly payment would not be received until 2020. Will that mess up
my taxes? Or is it better to do annual RMD since I will beginning in October of this year at age 70-1/2 in Oct.

I was adding it up and it looks like I would save $20 year doing it monthly or quarterly. Thank you for
taking the time to help me. Its not a big one in your eyes, but will be something for me financially.



Submitted by Alan - IRA critic on Wed, 2019-09-11 02:33

  • You didn’t say, but your question infers that this account is an IRA annuity, not a non qualified annuity. As such, your first RMD distribution year is 2019 based on the 12/31/2018 balance. However, because your required beginning date is 4/1/2020, you can defer all or any part of your 2019 RMD to 4/1/2020. Note that the portion you decide to defer will be added to your 2020 RMD. If the account was large, this could result in bunched income in 2020, but for a small account it probably does not matter much if you want to defer the 2019 RMD.
  • Unless there is a reason to defer any of your 2019 RMD, I suggest you complete it as a single distribution this year. Then start quarterly RMDs in early 2020. Starting them now might result in confusion and an RMD shortfall.
  • Note that your RMD divisor for your 2019 RMD is 27.4 unless you are married and your spouse is more than 10 years younger. That RMD is only 3.65% of your 12/31/2018 balance. Also, if this annuity has alot of fringe benefits, you may need to use a different 12/31/2018 balance than the cash balance. The insurance company can tell you what balance to use or can provide you the actual RMD amount for 2019.


Submitted by sandi tompson on Wed, 2019-09-25 20:20

Thank you.  The annuity option settlements payout mode can not be changed each year, so hopefully the rmd does not become a shortfall.  I’m not sure one can withdrawl extra to pay a rmd if it doesnt equate to what the installments for a guaranteed period equal.  Its all so confusing.



Submitted by Alan - IRA critic on Wed, 2019-09-25 22:40

If you actually annuitize the IRA annuity, the payouts will be deemed to satisfy your RMD for that account. There is no longer a year end balance from which to calculate the RMD in any event. However, many varities of annuities offer withdrawal benefits that appear to be annuity payouts, but the account has not actually be annuitized. There is still a year end balance to calculate the RMD in the usual manner. You should call the insurance company and ask them exactly what you have with respect to RMDs.



Submitted by sandi tompson on Thu, 2019-09-26 20:08

Thank you.  If i choose a 10 or 15 year certain payout.  Is the difference of course the amount would be more on the 10 year.  But would the 15 year make my tax year easier regarding social security and medicare income?  Would a 10 year cause a more tax consequence since it is more money in a lesser time?  Thank you.  This will be my last question and I sure appreciate your time and thoughtful answers.



Submitted by Alan - IRA critic on Thu, 2019-09-26 22:57

  • Good question. Yes, the faster 10 year payout will result in larger annual distributions, which could increase the amount of SS income which must be included in your taxes. This inclusion of SS income begins when your other income (including the IRA distributions) plus 50% of your SS exceeds 25,000 if you are single or 32,000 if you are married filing jointly. The maximum SS that can be included is 85% of your benefits (or total benefits if married. That occurs at 34,000 if you are single or 44,000 if married. Therefore, you would have to look at your last tax return and determine what these figures would be with the added IRA income. 
  • Note that if you did not annuitize and only took out your minimum RMD, the IRA would last until you are 115, albeit with much smaller distributions. So even 15 years is much faster than a standard RMD, and 10 years even faster. 


Add new comment

Log in or register to post comments