How a Withdrawal Affects an RMD

June 1, 2022

One of the benefits of our annuity contracts is the option to set up automatic required minimum distributions on an annual basis. Clients can set an annual RMD payment to occur between February and November. RMD payments that are set for automatic distribution are never subject to a surrender charge.

The annual amount of an RMD is determined at the beginning of each year. When an RMD is set up to pay annually, your client may choose to take one or more withdrawals before that payment date. When that happens, the scheduled RMD payout will be the difference between the original RMD amount and the total funds withdrawal earlier that calendar year.

Take a look at this example:

  • A client schedules an RMD for November.
  • The client takes a one-time withdrawal of $1,000 in June.
  • If the RMD for the year is $3,000, the November payout will be $2,000 ($3,000 RMD minus the $1,000 June withdrawal).

Receiving a lesser amount might surprise clients expecting the full RMD amount. Remind your clients that additional withdrawals can affect RMDs.

Have Questions?

Please contact a service specialist at 800.247.6888 or send us a message.

 

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