RMD for an Annuitized IRA
L1: RMD for an Annuitized IRAHello all,
I am 66 (born 08/22/1949)and I purchased a 20 year period certain annuity with a fixed payout each month. The year end 1099-R was coded with a 7 in Box 7 and an X in the IRA/SEP/Simple Box. Now, to me that looks like a traditional IRA.So, will this coding continue after I reach the age of 70 1/2? And, if so, how do I explain to the IRS this is an IRA that has been annuitized? Or, did my insurance company code the 1099-R incorrectly. I am totally confused and I can’t get a straight answer from my insurance company, my state help line and even the IRS for that matter and I am concerned about what will happen after I reach 70 1/2 when the RMD factor kicks in.
gus2016-02-18 10:05, By: Gus, IP: [22.214.171.124]
L2: RMD for an Annuitized IRAThat coding will continue. The real question is whether the entirepayouts are RMDs for this contract or not. You have surrendered the premium to the insurance company in exchange for 20 years of payouts and you no longer have a year end balance from which to calculate a standard RMD. The IRS Regs in 1.401(a)(9)-6are vague if you do a period certain annuity not based on your life expectancy or joint life expectancy and the distributions run beyond 70.5. Most likely those distributions will be deemed your RMD for this particular IRA annuity only. The IRS should be happy with that since the distributions are at a much higher rate than the usual RMD calculation. Since these distributions would be considered RMDs for the IRA annuity, none of the distribution would be eligible for rollover.2016-02-18 22:49, By: Alan S, IP: [126.96.36.199]