RMD Question

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  • peggysioux
    Senior Member
    • Sep 2006
    • 666

    #1

    RMD Question

    Taxpayer has several IRA accounts and turned 70 1/2 in 2019. Financial institutions provided the information of RMD amounts needed for for each IRA account. Taxpayer cashed in an annuity that was over the required minimum distribution of all IRA accounts and received a 1099-R for the distribution from the annuity. The 1099-R for the annuity distribution is not marked as an IRA. My question - does the distribution from the annuity satisfy the RMD requirement for the IRA's? Or being the annuity was not part of an IRA, the RMD's are still required from the IRA accounts?

    Peggy Sioux
  • Lion
    Senior Member
    • Jun 2005
    • 4699

    #2
    No. (Unless you're asking about 2020 when no RMDs are required)
    Last edited by Lion; 10-06-2020, 03:10 PM.

    Comment

    • terryats
      Senior Member
      • Jan 2019
      • 258

      #3
      If the annuity was purchased with qualified funds I believe it would count towards RMD. the only qualified funds that have to be kept separate for the RMD are 401s, 403s, and IRAs

      Comment

      • RWG1950
        Senior Member
        • Nov 2017
        • 461

        #4
        It is my understanding that someone turning 70 1/2 in 2019 would have an RMD obligation for that tax year. (Their first RMD year)
        The post does not seem to say if any IRA funds were withdrawn by 12-31-19 or 3-31-20 to satisfy the initial RMD.
        Although an annuity can be used to fund an IRA, the 1099-R is not coded as an IRA distribution.
        This likely resulted from it being a non-qualified annuity. Such a distribution would not count toward the IRA RMD for 2019.
        The RMD for 2019 appears to have not been distributed as required.
        Taxpayer might want to check with the insurance company to verify that it was not an IRA.

        Comment

        • Lion
          Senior Member
          • Jun 2005
          • 4699

          #5
          I see teachers with annuities that are labeled 403(b)s. How did your client purchase his annuity?

          Comment

          • RWG1950
            Senior Member
            • Nov 2017
            • 461

            #6
            Taxpayers holding 403-b accounts would also not have the IRA box checked on the 1099-R, but if the annuity distribution was from
            a 403-b, it still could not have satisfied the IRA RMD.
            As I understand this, IRA's, 401-K's & 403-b's & 457's each have their own separate RMD calculation & distribution requirements.

            Comment

            • Lion
              Senior Member
              • Jun 2005
              • 4699

              #7
              RWG made the point I was aiming for. An annuity not labeled as an IRA is probably not an IRA and can't count as part/all of the IRA RMD.

              Comment

              • peggysioux
                Senior Member
                • Sep 2006
                • 666

                #8
                Lion, taxpayer is a retired teacher and she contributed to the annuity through her work.

                Comment

                • Lion
                  Senior Member
                  • Jun 2005
                  • 4699

                  #9
                  Then it's a 403(b) probably, or maybe a 457; it has it's own RMD requirement. That is definitely NOT an IRA and that distribution will NOT satisfy her 2019 RMD requirement for her IRA. She needs to take her late IRA RMD from one or move of her IRA accounts ASAP. (You're not talking 2020, right? 2020 she'd be off the hook with no RMDs required.) RWG gave you details above.

                  Comment

                  • peggysioux
                    Senior Member
                    • Sep 2006
                    • 666

                    #10
                    Well the good news that I just found was the Cares Act included special rules for individuals who turned 70 1/2 in 2019 and postponed their 2019 RMD until 2020. The waiver applies to the 2019 RMD. So she is not required to take the 2019 RMD.

                    Peggy Sioux

                    Comment

                    • TAXNJ
                      Senior Member
                      • Jan 2007
                      • 2106

                      #11
                      Is this what you are referring:

                      IR-2020-127, June 23, 2020 — The Internal Revenue Service today announced that anyone who already took a required minimum distribution (RMD) in 2020 from certain retirement accounts now has the opportunity to roll those funds back into a retirement account following the CARES Act RMD waiver for 2020.
                      Always cite your source for support to defend your opinion

                      Comment

                      • RWG1950
                        Senior Member
                        • Nov 2017
                        • 461

                        #12
                        Hadn't seen the IRS 6-23-20 item pertaining to certain 2019 RMD distributions. Thanks for passing along this info.

                        Comment

                        • Gene V
                          Senior Member
                          • Jun 2005
                          • 1057

                          #13
                          This information was in TheTaxBook News update. https://www.thetaxbook.com/view_update.asp?1=4141

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