rfahey, you state "the RMD on this annuity would be calculated like any other `account.'" IT IS NOT an "account," the POINT I WAS TRYING TO MAKE (but not really any longer). In most respects the RMD rules are identical for IR-annuities and IR-accounts , but in calculating the actual annual dollar amount the rules differ (are "similar"). Each contract provides for an rmd amount based on its own internal factors and assumptions (determined under different rules - see below).
Perhaps the IR-Annuity is not subject to the RMD rules [blasphemy]!
To be an IR-Annuity under Code Sectioin 408, the contract issued by the insurance company provides for the distribution of a minimum amount to comply with the RMD rules that apply to annity contracts that is an individual retiremen arrangement. If it were an IR-Annuity under CODE SECTION 408(b) it would have been in pay staus (annuitized). The fact that it isn't and the individual is age 90 is perplexing. However, there may be a reason (see later).
Pub 590 states:
"Distributions from individual retirement account. If you are the owner of a traditional IRA that is an individual retirement account, you or your trustee must figure the required minimum distribution for each year. See Figuring the Owner's Required Minimum Distribution, later.
"Distributions from individual retirement annuities. If your traditional IRA is an individual retirement annuity, special rules apply to figuring the required minimum distribution. For more information on rules for annuities, see Regulations section 1.401(a)(9)-6. These regulations can be read in many libraries, IRS offices, and online at IRS.gov." (But see below.)
Now, that section, Treasury Regulations Section 1.401(a)(9)-6, Required Minimum Distributions for Defined Benefit Plans and Annuity Contracts is not (always) the same as the rules regarding IRA "accounts" found in 1.408-2(b)(6) that apply to "Individual Retirement Accounts" where getting your rmd may be optional. That section refers to section 1.401(a)(9)-5 were the annuity has not yet been annuitized. In that case the regular Pub 590 "individual account" rules apply and Mike is spot on.
The holding of an IR-Annuity (that is a 408(b) IRA) is rarely held in a brokerage account and is generally done by accident.
Is it possible that the contract was issued prior to ERISA in 1974? In those days (and for a short period thereafter), insurance companies sold an after-tax product called an "Individual Retirement Annuity," some even were called "qualified." HOWEVER, they were not the same as Individual Retirement Annuities under Code Section 408(b). A friend mentioned another possible reason, the annuity contract is a single premium deferred annuity generally treated like a CD account for RMD purposes. I suspect yours does say "IRA" all over it.
Because this annuity has not been placed in pay status and the individual is age 90, I believe this is a either a PRE-ERISA annuity contract (or one that was sold shortly after) - and no RMD rules appply to it. If so, it may be unwise to offset required distributions amounts from the IRAs under Code Sectio 408(a).
I do not think I can be of further assistance. Hope this helps.
Edited by Gary Lesser, 31 January 2013 - 01:35 PM.