Annuity valuation & RMD's

[Guest jppcpa]

Any thoughts on the valuation of annuity contracts that have a higher death benefit than current account value and how that will affect RMD calculations? This seems just asinine to me. We now have to base current income recognition on possible future benefits?

I know this is a response to the Roth conversion schemes, but the Service seems (to me) to have gone beyond all common sense with this one. You could conceivably have a situation where the RMD is greater than the account value (e.g. $1000 account value with a $100,000 death benefit). If the actual funds available are less than the RMD, would you get penalized (in addition, to losing the potential death benefit if you had to surrender the contract!).