AmyC
I'm sorry, I was and I'm still somewhat confused.
I don't see how companies (financial and insurance) can "bend" the IRA RMD = FMV/divisor is calculated. And I realize IRAs it can be calculated one each or all at once; and the result is same. But not so much with annuities.
Here's the calculation I refer to above, and some background on this.
My annuity was purchased from money in one of the IRAs, so the annuity is qualified. The annuity has a so-called Total Purchase Payment (TPP and the cost). The insurance company said they would set an FMV (as of 31Dec). So, I assume that FMV will be close to or equal to the TPP. If I divide TPP by my divisor from the Uniform Lifetime Table (ULT), I get a number I refer to as aRMD (annuity RMD). aRMD is $9000 (diff) less than the total payout of the annuity in 2024. Then I calculate the RMD for the 4 IRAs by dividing the sum of the 4 IRAs FMV (31Dec2023) using my divisor from the ULT. Call that iraRMD. Then the new calculation (a result in 2023 after more changes to Secure 2.0) says to substract the $9000 from iraRMD and add the annual annuity payoff, and the outcome is an RMD number that integrates all 5 accounts (4 IRAs and 1 annuity).
My understanding from reading a number of financial advisors is that in 2022 or 2023 Congress revised some rules in Secure 2.0 that also told IRS to fix issues with annuities and IRAs (that have been an irritation to annuity owners and insurance companies that sell them).
My question is:
How do I report my IRAs and annuities through TurboTax or on the IRS Forms without being penalized for failing to take another $9000?
Secure 2.0, IRS, and Congress together have not yet stabilized(?)
Thank you for listening and your time.
Once you enter your forms, select ALL RMD taken and you should not have a problem.
I can feel your frustration. You are correct and well researched and things take time and change constantly. You know what is correct and can prove it so you don't need to worry about the tax law part. The IRA RMD can be moved around meaning maybe you have 10 IRA accounts with 10 RMD amounts but you only take one distribution from one account that covers the total RMD of all 10 accounts. The banks don't keep up with that, the owner does.
There is a difference between tax law and tax program. The program asks about RMD each time you enter a form. As long as you have taken all of your required RMD, you just select, all RMD so the program isn't trying to figure out if you owe a penalty from not taking out enough money.
All pension plans and annuities have the RMD built into their disbursement of your funds. The IRA's don't which is why they can be manipulated by you for the distribution.
