Immediate Annuity Value for One-Time Change
L1: Immediate Annuity Value for One-Time ChangeAn individual started SEPP withdrawals from a custodial IRA. After starting the SEPP the individual used a portion of the balance to purchase an immediate annuity inside the IRA. Now that individual wants to do the one-time change.How would the immediate annuity be valued when determining the balance of the account to calculate the one-time change? There are other assets in the account that show a value, but the immediate annuity has no cash value. Can the immediate annuity not be considered aspart of the account balance? 2009-01-06 21:55, By: JK, IP: [184.108.40.206]
L2: Immediate Annuity Value for One-Time ChangeNo you may not exclude.
One of the problems with immediate annuities… they are easy to value at the beginning (premiums paid),but harder as time goes by.If it is a period certain annuity (no life contingency) then the value would be the present value of the stream of remaining payments. Your best bet is to have one of the actuaries at the insurance company provide a present value of future benefits calculation.2009-01-06 22:15, By: Gfw, IP: [220.127.116.11]
L3: Immediate Annuity Value for One-Time ChangeGfw,Would you say the IA purchase has effectively eliminated the switch to RMD, or has the IRS ruled that a present value calculation would be acceptable?.2009-01-06 23:58, By: Alan S., IP: [18.104.22.168]
L4: Immediate Annuity Value for One-Time ChangeIt shouldn’tprevent the change, merely that it may not be excluded at the time of the changeif it was part of the original SEPP.All that would be required is to get an accurate valuation from the insurance company’s actuary so that it can be included in the calculation after the change. If the immediate annuity paymentexceeds the first MD payment, merely have the immediate annuity payment paid back into the IRA which is where is should have been paid in any event.2009-01-07 00:06, By: Gfw, IP: [22.214.171.124]