Advanced Underwriting Consultants

Ask the Experts – September 4

Ask the Experts!

Here’s the question of the day.

 Question:  I have a client who has three different IRAs, one of which has been annuitized. Can the payment from annuitization satisfy the RMD for the other IRAs?

Answer:   Probably not. Here is an excerpt from the Treasury Regulations:

In order to satisfy [RMD requirements], except as otherwise provided in this section, distributions of the employee’s entire interest under a [qualified] plan must be paid in the form of periodic annuity payments for the employee’s life (or the joint lives of the employee and beneficiary) or over a period certain that does not exceed the maximum length of the period certain determined [above].

Treas. Reg. § 1.401(a)(9)-6, A-1(a) (emphasis added), available at http://www.gpo.gov/fdsys/pkg/CFR-2012-title26-vol5/pdf/CFR-2012-title26-vol5-sec1-401a9-6.pdf.

In other words, you can meet RMD requirements for an IRA if the account is annuitized for the life expectancy of the participant or for a shorter period. There’s nothing in the rules that says you can definitely use excess immediate annuity payments toward RMD requirements for other IRAs, so the conservative answer is that the taxpayer cannot do this.

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