 |
02-01-2008, 04:38 PM
|
#1
|
Recycles dryer sheets
Join Date: Oct 2007
Posts: 332
|
Making an IRA disappear?
If, at age 70 1/2, one purchased an immediate fixed annuity with the entire balance of a traditional IRA, do you still have an IRA after the purchase? If the answer is yes, then what happens further in the future when the RMD requirement exceeds the annual payout on the annuity? If the answer is no, then the RMD requirement is forever satisfied when the annuity is purchased?
|
|
|
 |
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!
Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!
You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!
|
02-01-2008, 07:28 PM
|
#2
|
Thinks s/he gets paid by the post
Join Date: Jun 2006
Location: Central, Ohio, USA
Posts: 2,635
|
Depends if the annuity is paid for with after tax money (Roth IRA) or T-IRA which was purchased with after tax dollars (no deduction taken). If not after tax ALL withdrawals will be taxed otherwise part of the withdrawals will be taxed. Talk to the people you plan to purchase the annuity from.
__________________
Vietnam Veteran, CW4 USA, Retired 1979
|
|
|
02-01-2008, 07:47 PM
|
#3
|
Recycles dryer sheets
Join Date: Oct 2007
Posts: 332
|
Thanks for that reply, but that was not really my question. I know all the distribution will come out as ordinary income. I can't get an answer to this question anywhere.
|
|
|
02-01-2008, 08:05 PM
|
#4
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Aug 2006
Posts: 12,483
|
__________________
Consult with your own advisor or representative. My thoughts should not be construed as investment advice. Past performance is no guarantee of future results (love that one).......:)
This Thread is USELESS without pics.........:)
|
|
|
02-02-2008, 08:18 AM
|
#5
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Feb 2006
Location: Washington, DC
Posts: 10,758
|
Finance Dude's reference tells you that if you bought an SPIA with the entire proceeds of your IRA you could forget about RMDs. If you had another qualified plan or left some $ in the IRA you would have RMDs based on the residual amount.
__________________
Every man is, or hopes to be, an Idler. -- Samuel Johnson
|
|
|
02-02-2008, 10:36 AM
|
#6
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Aug 2006
Posts: 12,483
|
Quote:
Originally Posted by donheff
Finance Dude's reference tells you that if you bought an SPIA with the entire proceeds of your IRA you could forget about RMDs. If you had another qualified plan or left some $ in the IRA you would have RMDs based on the residual amount.
|
Well, that's what fairmark said. However, I posted this question at an IRA forum for advisors, and I got "it depends", "it might be in the tax code somewhere"...........
It seems logical that a SPIA would remove the RMD, because you would have no way to calculate the year-end value going forward, but methinks the IRS has thought of that already.........
__________________
Consult with your own advisor or representative. My thoughts should not be construed as investment advice. Past performance is no guarantee of future results (love that one).......:)
This Thread is USELESS without pics.........:)
|
|
|
02-02-2008, 01:10 PM
|
#7
|
Full time employment: Posting here.
Join Date: Oct 2003
Posts: 961
|
I think the "it depends" part is probably correct. From IRS Pub 590: Miscellaneous Rules for Required Minimum Distributions:
Quote:
Annuity distributions from an insurance company. Special rules apply if you receive distributions from your traditional IRA as an annuity purchased from an insurance company. See Regulations sections 1.401(a)(9)-6 and 54.4974-2. These regulations can be found in many libraries and IRS offices.
|
Or you could just contact the IRS for tax help -
Quote:
Asking tax questions. Call the IRS with your tax questions at 1-800-829-1040
|
.
- Alec
|
|
|
02-03-2008, 09:06 AM
|
#8
|
Recycles dryer sheets
Join Date: Oct 2007
Posts: 332
|
I knew if there was any place I could get an answer it would be here. Many thanks. The annuity person at VG said their position is that whatever amount the SPIA is, the RMD is satisfied for that amount only. I assume that this would be true even if said amount was the entire balance (but I did not think to axe that until afterwards).
|
|
|
 |
Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
|
|
Thread Tools |
Search this Thread |
|
|
Display Modes |
Linear Mode
|
Posting Rules
|
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts
HTML code is Off
|
|
|
|
» Recent Threads
|
|
|
|
|
|
|
|
|
|
|
|
|
» Quick Links
|
|
|