Can I add the end of year contract value of a qualified variable IRA annuity to my other IRA's and calculate a single RMD?

[mitchden1]

I annuitized my IRA variable annuity several years before my 70th birthday. I receive a yearly 1099-R showing the taxable amount. The annuity end of year contract value reflects my monthly annuity payments and the value of the portfolio.

I have other IRA accounts. My IRA yearly annuity payments are greater than the required RMD for all my IRA accounts. Since the yearly distribution from my annuity is greater than the required RMD for all my IRA accounts, do I need to take an additional RMD from my other IRA accounts?

[dmertz · Accepted solution]

Distributions from a annuitized IRA annuity are normally considered to be all RMD, entirely the RMD required of the annuity and therefore are unable to be aggregated with RMDs of other IRAs.

[mitchden1]

I spoke to the insurance company and they told me that I haven't annuitized the contract. My monthly payments are from the annuity rider and the RMD will be calculated from the end of year contract value. The rider payments have been reported on a 1099-R and I've been including the gross distribution/taxable amounts on my tax returns.

The RMD will be based on the end of year annuity contract value divided by 27.4. The RMD will be smaller than the yearly withdrawals from the annuity rider. They also told me that I can combine their RMD with the RMD's from my other IRA accounts and if the rider withdrawals are equal or greater than the total RMD from all my IRA accounts, I don't have to take any additional RMD from my other IRA accounts.

Does this make sense? Thanks for your help.

[dmertz]

Yes.  That explains my unexpressed curiosity as to how they determined a year-end value.  Since the contract has *not* been annuitized, it's treated like any other IRA with a year-end value.  Its previous year's year-end value is used to determine the RMD required of the IRA annuity.  Its RMD can be aggregated with the RMDs calculated for your other IRAs and the total RMD can be satisfied from the aggregated IRAs in any combination; your distributions from the deferred IRA annuity that are in excess of the deferred IRA annuity's RMD can be used to satisfy the RMDs of your other IRAs.