Aggregating RMD's between IRA Accounts and IRA Annuities

[Guest Fishchick]

I recently attended a training class where the instructor pointed out that the recently released IRS Regs on IRA annuities state that each individual annuity contract must satisfy an MRD. This means that you can no longer take an MRD from your regular investment account to cover an IRA Annuity. I have not seen any articles or information that covers this point. I also cannot find the Reg Section referenced.

If anyone has info on this I would appreciate your sharing it.

Thanks!

Laura

[Guest Fishchick]

I found my notes on the reg section 1.401(a)(9)(D)(6). I don't know if this is proposed or final regs. I can't find the section in my online database, I guess because it is new.

[mbozek]

I thought that only applied where the annuity benefit is annuitized. If the employee does not commence the annuity at 70 1/2 the fvm of the annuity is added to the accounts of other IRAs for MRD purposes. See reg. 1.401(a)(9)-6 Q-12. The MRD can be taked for any IRA account.

[Guest Fishchick]

Discussing this further, the position came verbally from the author of the regs, Cathy Vohs, at the IRS in talking with the instructor of the class I attended. The rationale is that regular IRA's fall under 408(a) and annuity IRA's fall under 408(b) and therefore the two cannot be aggregated together. There was an expecation in this conversation that IRS would issue an announcement at some point to clarify.

[Belgarath]

I thought the same as Mbozek.

I would hope that the IRS doesn't adopt this "rationale" - and I use the term loosely in this context! If they want to specify a new method or methods for placing a value on an annuity contract, fine. But to not allow aggregation of IRA's in this situation for purposes of a RMD is just foolish, IMHO. I can't see any possible useful purpose to it.

Was there any indication given of when this guidance might be forthcoming?

[mbozek]

I am a little lost on this theory since the IRS regs state the FVM is aggregated with other IRA accounts regardless of whether they are custodial accounts or annuities or under 408©. If If you want a confirmation of the statement attributed to her why not call Cathy Vohs directly?