Annuity with Income Rider in IRA
Client is 73 and has 2 IRAs. IRA “A” has an annuity with a guaranteed income rider paying out $30,000 per year, which is enough to cover the RMD for both IRAs. (It is not annuitized) IRA “B” has mutual funds in it.
My question is if the CASH Value of the annuity in IRA “A” depletes to ZERO, but it’s still paying out the guaranteed $30,000 per year, can that $30,000 still be used to satisfy the RMD from IRA “B”?
Thanks in advance.
Permalink Submitted by Alan - IRA critic on Thu, 2022-06-23 23:37
Since the Annuity IRA has not been annuitized, the RMDs for both accounts can be aggregated in any combination. Therefore, the 30k from the annuity can be applied to the non annuity RMD. The insurance company should clarify exactly what the RMD is for the annuity since various fringe benefits could be enough to cause some of that 30k to be used for the annuity RMD.
Permalink Submitted by Jason McBride on Fri, 2022-06-24 15:16
Thank You. And this applies even though the cash value of the Annuity IRA has been depleted to ZERO, correct? Apologies if being repetitive, just want to make 100% certain I grasped your answer correctly. The reason I’m concerned is I have another party telling me that the IRS says that once the annuity cash value is at ZERO, then they no longer consider the money being paid out as an “RMD”, that they just consider it to be taxable income. That doesn’t sound correct to me, and so far they have not been able to show me any tax code on which they are basing that contention.