Minimum Distribution Aggregating IRAs
L1: Minimum Distribution Aggregating IRAsClient has two IRAs.Assume value of each IRA is $200,000.First IRA is invested in SPIA that pays him $12,000 annually. Second IRA is an account invested in various mutual funds. For RMD purposes, when you aggregate the IRAs RMD amounts to $20,000.Can the $12,000 annual paymentfrom IRA Number 1 be combined with $8,000 from IRA Number 2 to satify the RMD for the year?2008-05-29 09:14, By: Chris, IP: [188.8.131.52]
L2: Minimum Distribution Aggregating IRAsEverything that I have seen would have the annuity standing on it”s own and any other non-annuity contracts could be stand together.
With life contingencies as part of the calculatrions/assumptions, the annuity contractwould also be difficult to value as of 12/31 of each year even if that was the anniversary.2008-05-29 09:50, By: Gfw, IP: [184.108.40.206]
L2: Minimum Distribution Aggregating IRAsThese IRA RMDs should be able to be aggregated in the initial year of the SPIA only. In that first year, there was a prior year end account balance which could be used. The result would likely be a moderate reduction in the RMD taken from the non annuity IRA.
After that, as Gordon indicated, they would have to stand on their own and the SPIA should be in a separate contract.
I find it odd that the IRS issued the final RMD Regs in June, 2004 for annuity and DB plans, and still did not even address this very basic issue. They acted like none of the IRA annuities ever get annuitized.2008-05-29 14:56, By: Alan S., IP: [220.127.116.11]
L2: Minimum Distribution Aggregating IRAsAlan S. Thank you for your response. With respect to second and further subsequent RMD”s why would the annuity need to stand on its own?Couldone use a reasonable FMV of the annuity, such as a life insurance reserve, or the present value of what someone could purchase the remaining payment stream as of each December 31 as a proxy for theaccount balance to determine the applicable RMD? Do you know of a regulation or PLRor any other informal guidance on this issue?2008-06-03 13:37, By: Chris, IP: [18.104.22.168]
L2: Minimum Distribution Aggregating IRAsIn theory a present value calculation should work, but I am not aware of any PLR or other IRS notice addressing the issue to date. Accordingly, separating the annuitized account after the first year seems to be the default method of determining the RMD for the rest of the IRA assets.
2008-06-03 13:55, By: Alan S., IP: [22.214.171.124]