Do Annuities Have RMDs?

Shawn Plummer, CRPC

Chartered Retirement Planning Counselor

Do Annuities Have RMDs?

Yes. Annuity RMD Rules

Annuities do have Required Minimum Distributions (RMDs) if they are part of a qualified plan like an IRA or 401(k).

Do Annuity Payments Count Toward RMDs?

All withdrawals and payments from qualified annuities count toward the RMDs. The amount you withdraw annually from these annuities is applied towards meeting the RMD.

Annuity Rmd

Do Non-Qualified Annuities Have RMDs?

No, non-qualified annuities do not have RMDs. They are not subject to the same RMD rules as qualified annuities and their payments do not count toward RMD requirements.

When Do RMDs Start?

RMDs for qualified annuities start at age 73. This is the age by which account holders must begin taking distributions.

Rmd Annuity

Annuity RMD Table

Age of CommencementType of AnnuityCounts Toward RMD
73 and aboveQualified AnnuityYes
Any AgeNon-Qualified AnnuityNo
Do Annuities Have Rmds

Conclusion

Understanding RMD rules for annuities is essential, particularly the differences between qualified and non-qualified annuities. RMDs start at age 73 for qualified annuities, and all withdrawals count towards meeting these distributions. In contrast, non-qualified annuities are exempt from RMDs. Contact us today for a free quote.

Annuity Rmd

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Frequently Asked Questions

Are annuities subject to RMD?

Yes, annuities are subject to Required Minimum Distributions (RMDs) starting at age 73 for most types of annuities, including traditional, variable, and deferred ones, if held in an individual retirement account (IRA) or another qualified retirement plan. The amount of the RMD is based on your life expectancy and the value of your annuity on December 31st of the prior year.

Do you have to take an RMD from a non-qualified annuity?

No, non-qualified annuities are not subject to Required Minimum Distributions (RMDs). However, distributions from non-qualified annuities may be subject to income taxes.

How do RMDs work with annuities?

With annuities, Required Minimum Distributions (RMDs) apply if held in an individual retirement account (IRA) or another qualified retirement plan. At age 73, you must start taking distributions from your annuity each year. The amount of the RMD is based on your life expectancy and the value of your annuity on December 31st of the prior year. The RMD must be taken by December 31st each year and is considered taxable income. Failing to take the RMD can result in penalties.

Do annuity payments count towards RMD?

Annuity payments from a qualified annuity that is held in an individual retirement account (IRA) or other qualified retirement plan do count towards the Required Minimum Distributions (RMDs) that you must take each year. The RMD amount is based on your life expectancy and the value of your annuity on December 31st of the prior year. The RMD must be taken by December 31st each year and is considered taxable income. You can choose to have the RMD taken as annuity payments or as a lump sum as long as the total RMD amount is taken.

Are annuities subject to required minimum distributions?

Yes, annuities held in individual retirement accounts (IRAs) or other qualified retirement plans are subject to Required Minimum Distributions (RMDs). This means you must take a minimum amount of money out of your annuity each year, starting when you reach age 73 (70 1/2 if you were born before July 1, 1949). The amount you must take out is based on your life expectancy and the value of your annuity on December 31st of the prior year.

Which annuities are RMD-friendly?

There are a few different types of annuities that can be RMD-friendly. One type is an immediate annuity, which begins making payments to the account holder as soon as it is purchased. Another type is a deferred annuity, which allows the account holder to defer taking distributions until a later date. Finally, there are variable annuities, which offer the account holder a variable rate of return.

Do annuity payments satisfy RMD?

No, annuity payments do not satisfy the required minimum distributions (RMDs) for retirement accounts. RMDs are a mandatory annual withdrawal amount that individuals over a certain age must take from their retirement accounts, such as 401(k)s or traditional IRAs. Annuity payments are separate from RMDs and do not count toward fulfilling this requirement.

Do variable annuities have RMDs?

Yes, variable annuities do have Required Minimum Distributions (RMDs). RMDs apply once the annuity owner reaches the age of 72, or 70 ½ if born before July 1, 1949. Failure to take the RMD can result in substantial penalties from the IRS. It is important to consult with a financial advisor for individualized guidance.

What is an RMD calculator?

An RMD calculator is a useful tool that helps individuals determine the minimum amount they must withdraw from their retirement accounts each year. It takes into account factors like age, account balance, and life expectancy to ensure compliance with IRS regulations. With an RMD calculator, individuals can plan their withdrawals and avoid penalties for not taking the required minimum distribution.

How do I calculate my required minimum distribution?

To calculate the required minimum distribution (RMD), an individual must divide the year-end balance of their retirement account by the applicable distribution period. The IRS provides life expectancy tables to determine the distribution period. However, it is crucial to consult with a financial advisor or tax professional for accurate calculations and guidance on how to calculate my required minimum distribution.

Are annuities included in Required Minimum Distribution (RMD) calculations?

Yes, for qualified annuities, which are annuities purchased with pre-tax dollars or within tax-advantaged retirement accounts like IRAs, the value is included in RMD calculations. However, nonqualified annuities purchased with after-tax dollars are not included in RMD calculations. The type of annuity determines whether it impacts your RMD.

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Shawn Plummer, CRPC

Chartered Retirement Planning Counselor

Shawn Plummer is a Chartered Retirement Planning Counselor, insurance agent, and annuity broker with over 14 years of first-hand experience with annuities and insurance. Since beginning his journey in 2009, he has been pivotal in selling and educating about annuities and insurance products. Still, he has also played an instrumental role in training financial advisors for a prestigious Fortune Global 500 insurance company, Allianz. His insights and expertise have made him a sought-after voice in the industry, leading to features in renowned publications such as Time Magazine, Bloomberg, Entrepreneur, Yahoo! Finance, MSN, SmartAsset, The Simple Dollar, U.S. News and World Report, Women’s Health Magazine, and many more. Shawn’s driving ambition? To simplify retirement planning, he ensures his clients understand their choices and secure the best insurance coverage at unbeatable rates.

The Annuity Expert is an independent online insurance agency servicing consumers across the United States. The goal is to help you take the guesswork out of retirement planning and find the best insurance coverage at the cheapest rates

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