Q. My question regards Required Minimum Distributions and how this Internal Revenue System rule relates to an annuity purchased with IRA funds. If the annuity in question has fixed payment amounts that are less than a calculated RMD, the funds are not available to the account owner for distribution to meet the RMD rules. Does this scenario appear to be a credible reason for not meeting the RMD rules and an exception that IRS should allow?
A. We don’t answer questions about IRAs here, but I will pretend you asked about the Thrift Savings Plan, since the answer is the same in either case. An immediate life annuity always satisfies the minimum distribution requirement for the funds that were used to purchase the annuity. If you use part of your retirement account to purchase the annuity but left some money behind, then the RMD will have to be separately satisfied each year for the remaining funds.