Assume that the divisor for an an IR-Account RMD is 4, next year it is 3. There is $200,000 remaining in the account (12/31 FMV), so we distribute $50,000.

Now, in addition, lets assume, that an IR annuity was purchased some time ago. It calls for say a lifetime distribution of $44,000 under its RMD provision (based on its unique annuity factors used by insurance company). It has no real account value, but an interpolated terminal reserve (ITR) of $85,000. Now, the individual arranges to have $50,000 distributed from this IR-Annuity for next 4 years. What I am saying is that the IR-Account distribution can be reduced by just $6,000 ($50,000 - $44,000) and still meet RMD rules. The IR-Account will ceased distributions at age 110 (distribution factor is 1), whereas the IR-Annuity could make payments for life (say age 120) without violating the RMD rules.

Only if the annuity contract were purchased in an IR-Account as an investment, would the contracts FMV (ITR) be used for purposes of calculating the RMD.

Since we arrive at different numbers to satisfy the RMD rules, one of us is wrong! The offset, imo, is the amount by which the amount distributed ($50,000) exceeds the RMD required under the IR-Annuity contract (unknown, as determined by insurance company).