RMD's - Exceptions You Need To Know

It's that time of year again and I wanted to share a few Required Minimum Distribution reminders of which you should be aware:

• With the new Qualified Longevity Annuity Contract (QLAC) rules passed this year clients can now defer RMD's on up to 25% or $125,000 of qualified funds to age 85.

• Many clients, agents, and companies are not aware that when calculating RMD's there is an exception to using the Uniform table that can significantly decrease a client's RMD. 

In most circumstances RMD's from qualified accounts should be based on the uniform table.
 

However, there is an exception you should know....
 

If the sole beneficiary of the IRA holder is a spouse 10 years or younger than the IRA holder, they can use the Joint Life & Last Survivor table. Again, this only applies if the spouse is the only primary beneficiary. If there is any other primary beneficiary (like a child), use the uniform table.

IRA holders could use the uniform table if they choose but it would result in a higher than required RMD.

For Example:

• Uniform RMD factor for 75 year old = 22.9

• Joint Life factor for 75 year old with 60 year old spouse sole beneficiary = 26.5

• Based on a $100,000 12/31 value, the RMD would be reduced from $4,366 (uniform) to $3,773 (joint table)
• That's $593 less if using the joint table

I am not a tax advisor and this is general information only. Make sure to consult a tax advisor about your clients' specific situation.

For more information, contact Great Plains Annuity & Life Marketing at 800.710.1115 or email info@gpam.biz.

About the Author

Mike Lair is Senior Vice President - Annuity Marketing at GPALM. Mike's role with GPALM involves training of annuity wholesalers as well as managing his own group of producers selling fixed, indexed and immediate annuities. Mike has over 24 years industry experience in all aspects of fixed and fixed indexed annuities and life insurance. Mike is here to assist YOU in finding the best products available for your clients as well as provide sales ideas and other sales support. 

He can be reached at 800.710.1115 or by emailing mike@gpam.biz.