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.
Answer:
In most cases, you do not need to make any special notation on your tax return indicating that part or all of your Required Minimum Distribution (RMD) came from an IRA annuity. Instead, you simply report the IRA distributions shown on the Form 1099-R issued by your IRA custodian. If you received annuity payments from your IRA, those payments should be included on a Form 1099-R, and if you also took distributions from other IRA assets, you may receive additional Forms 1099-Rs. On your Form 1040, you report the total IRA distributions and the taxable amount as indicated. There is no separate line on the tax return to identify which distributions satisfied your RMD. It is important, however, to keep supporting documentation with your tax records, including your Form 1099-Rs, year-end IRA statements, the annuity contract information, and any RMD calculations provided by your custodian or financial advisor showing that the annuity payments counted toward your required distribution. One important exception involves Qualified Longevity Annuity Contracts (QLACs), which are subject to different RMD rules than regular IRA annuities. Likewise, if the annuity is held in a separate IRA from your other IRA assets, the method for calculating the RMD may differ.
Adam Osiason
