IRA RMD
I have an IRA and I purchased an annuity with part of the money. I understand that the payments from the annuity can be used as part of my required RMD. How do I document this when I file tax return.
Quick Answer:
When you receive distributions from an annuity held within an IRA, the insurance company will issue a **Form 1099-R**. This form reports the total distribution in Box 1 and the taxable amount in Box 2a.
To document this on your tax return:
1. **Form 1040:** Report the total distributions from all your IRAs (including the annuity payments) on line 4a. Report the taxable portion on line 4b.
2. **RMD Aggregation:** Because the annuity is inside a traditional IRA, the payments count toward your total aggregate RMD for all your traditional IRAs. You do not need to file a specific "compliance form" to prove you met the RMD; however, you should keep the **Form 5498** sent by your custodian, which reports the fair market value of the account and identifies it as an IRA.
3. **QLAC Exception:** If the annuity is a Qualified Longevity Annuity Contract (QLAC), different reporting rules apply regarding the value excluded from RMD calculations.
You do not "attach" a worksheet to your return, but you should keep your RMD calculation records in your tax file in case of an IRS inquiry.
Note: This answer is provided for convenience only. It is important that you speak to a CPA about your individual tax situation.
