On Jul 26, 4:10*pm, David <anothern...[at]access4less.net> wrote:
- quote -

That is my understanding. It doesn't matter what the numbers actually
are so long as payments are not planned to exceed your projected life
expectancy.

- quote -

That seems to be the case. For the record, I'm not saying it is or
isn't the prudent financial decision, just that it's possible.

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- quote -

So I take it that an immediate annuity paying 7.42% on some 200k of
inherited IRA , and it has zero value at death will satisfy the RMD?

IN otherwords, he CAN buy one with his inherited IRA and not have RMD
problems?

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kastnna wrote:

- quote -

This reg answers my concern about calculating RMDs. This is one for the
FAQ. An important, but little known reg. Nicely done, kastnna.
Joe

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On Jul 24, 11:45*am, se...[at]panix.com (Seth) wrote:
- quote -

If an immediate annuity is qualified and based on a payout scheme that
is not intended to exceed your life expectancy the annual payout
satisfies the RMD requirement even if it is less than would otherwise
be required.

Regulation section 1.401 (a) (9)-6

RMDs are not technically "based on the _current_ value of the IRA",
but I think I knew what you meant. They are based on the value as of
the end of year prior to the tax year in question. IOW, a 2008 return
filed in 2009 will be based on the value as of 12/31/2007.

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In article <g684i3$50d$1[at]aioe.org> , dpb <none[at]non.net> wrote:
- quote -

Isn't RMD based on the _current_ value of the IRA? The payments are
7.42% of the _initial_ balance, which is a much higher percentage of
the value of a life-only annuity for someone age 75.

Seth

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dpb wrote:

- quote -

You understand that an inherited IRA's RMD does not get recalculated by
going to this chart each year, right? That if Age 70/ 17yr divisor is
the first year, age 71 is 16 yrs, age 72, 15 yrs, etc. This rule is for
beneficiaries and differs from the standard RMD you can't outlive
(unless, of course you make it to 111).

To the OP/David, see pub 590. http://www.irs.gov/pub/irs-pdf/p590.pdf
Joe

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David wrote:
....
- quote -

No, if a RMD is required, the life expectancy tables start at 17.0 years
at age 70 and go down from there. 7.42% --> 13.48 yr expectancy so
after age 75 it wouldn't be sufficient.

Here follows a short portion of the table for single beneficiaries from
Pub 590:

70 17.0
71 16.3
72 15.5
73 14.8
74 14.1
75 13.4
76 12.7
....

--

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Well, he is attracted to an immediate annuity because he knows it runs
till he dies, he wont run out of the money. When you have a sum of
money and need to tap the principal (and dont know how much to take)
it is scary. The immediate annuity in his case will give him 7.5%
which is more than he could get from bonds and he can't stomach the
stock market. Also, it keeps him from invading the principal (always
too easy to do).

The IRA was inherited from deceased mother who inherited it from her
husband. It is an inherited IRA.

Where are the distribution tables for an inherited IRA.?

Right now the annuity would pay 7.42% a year and thats that (typical
of immediate annuities, they just pay so much a month till you die,
some have caveats about inflation and a lump sum for your heirs, this
one does not do any of that). Ive never heard of ones that follow the
RMD rules specifically.

He hasnt done anything yet.

I'm wondering if the 7.42% would meet the minimum withdrawal rules.

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joeu2004 wrote:

- quote -

I started to suspect this might be the case, but was unable to find any
IRS doc to confirm.
I'd still be real careful how the funds were transfered and titled.
Joe

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On Jul 22, 5:30*pm, David <anothern...[at]access4less.net> wrote:
- quote -

I don't believe you should be. Look at the prospectus for the
annuity.

We did exactly what you ask about for my mother.

First, we did a rollover, not even a direct transfer. No problem
with that.

Second, the Pacific Life prospectus explicitly states that the
RMD is an exception to the usual limits to the amount that
can withdrawn annually.

I doubt that that is altruism on the part of Pac Life. I'm sure
it is required by federal law. But I cannot quote chapter and
verse.

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- quote -

This is what I am worried about.

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David wrote:
- quote -

There are two issues here:

The rules regarding an inherited IRA are specific and unforgiving. The
original IRA had to have the beneficiary listed as such on the account.
IRAs cannot pass, unbroken, via will. The new account is not
"JoeTaxpayer, IRA" but "JoeTaxpayer's deceased Dad, IRA, JoeTaxpayer,
beneficiary". If these rules are not properly followed, all assets must
be withdrawn within 5 years.

Second, an inherited IRA (if not by a spouse, for whom my lecture above
doesn't apply, spouses take it as their own, if they are listed on the
account as bene) goes into RMD mode the year after inheritance. Since an
immediate annuity offers a fixed annual distribution, but the RMD will
rise as the divisor goes down, what will you do when the RMD is higher
than the amount available?

Joe

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<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

In article <5694f1e7-8ec4-495b-aa33-e5c7f49d7666[at]l42g2000hsc.googlegroups.com> ,
David <anothername[at]access4less.net> wrote:
- quote -


While you would not contribute or transfer funds into an
inherited IRA, if you already have one whose custodian will be
willing to purchase an annuity with existing funds or by
selling off assets, sure, you can do it.


Otherwise if you find an IRA custodian willing to purchase
an annuity for you, and arrange for a Direct Transfer --
custodian to custodian -- that will work too.

But please, before you do, speak with a financial advisor who
does not sell anuities to advise you on the wisdom of purchasing
an annuity in your IRA.

I'm not a financial advisor but think it's not a good financial
move.
--


ArtKamlet at a o l dot c o m Columbus OH K2PZH

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Person has an inherited IRA (trad, not Roth), and wants to buy an
immediate annuity with the funds in it. Will this be a problem?

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<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >