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Can I pay my RMD with money outside of my retirement account?

I own a variable annuity fund that I am converting to monthly payments. It almost reached maturity (i.e. 2/1/2017) and I am taking advantage of an offer by the annuity institution a little early. I am turning 71 years old in July and was informed I need to withdraw money from my account this tax year when I turn 70 1/2. I have money to pay the RMD in my bank account. Can I pay the RMD with money independent of the annuity account? Or, do I have to withdraw money from the annuity account?




Retirement, Retirement Savings, Annuities
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June 2016

That depends on how many qualified accounts, such as IRAs, 401(k)s, 403(b)s or similar you have. Technically, if you have multiple IRAs you can take a distribution from one (as long as it meets the aggregate amount). However, if you have an IRA and a 401(k), you will have to take two different distributions. This is the most common reason why financial advisors often will recommend rolling over different 401(k)s into one IRA.

If your annuity is not a retirement account (e.g. non-qualfied annuity), you will not be able to take a distribution and count it as your Required Minimum Distribution (RMD).

On a side note, if you are married and your wife has an IRA, you cannot take a distribution from hers and have it count as yours.

Keep in mind if you don't take your RMD (or forget), there will be a 50% penalty (e.g. $1,200 penalty on a missed $2,400 RMD).

If you have any further questions, I'd be happy to help.

June 2016
June 2016
June 2016