Annuities add a layer of complexity to RMD planning — the rules depend on the type of annuity you have, whether it's held inside an IRA, and whether you've started receiving payments yet.
The good news: once you understand the two key distinctions below, most of the confusion clears up.
In short: Qualified annuities (held inside an IRA or 401(k)) are subject to RMD rules starting at age 73. Nonqualified annuities (purchased with after-tax money outside a retirement account) are not. If you own a Qualified Longevity Annuity Contract (QLAC), special rules let you defer RMDs on that portion of your account until age 85.
The First Question: Qualified or Nonqualified?
Everything starts here.
Qualified annuity — held inside a Traditional IRA, SEP IRA, 401(k), or similar tax-deferred account. Subject to standard RMD rules.
Nonqualified annuity — purchased with after-tax dollars, outside a retirement account. Not subject to RMD rules during the owner's lifetime.
If you're not sure which type you have, check where the money came from. If it went into the annuity through a retirement account or rolled over from one, it's qualified.
Qualified Annuities and RMDs
A qualified annuity follows the same rules as any other tax-deferred retirement account.
- RMDs begin at age 73
- The deadline is December 31 each year (April 1 for your very first RMD)
- Missing a distribution triggers the standard 25% excise tax on the shortfall — reducible to 10% if corrected within two years. See: RMD penalties explained
How the RMD is calculated depends on whether the annuity is in the accumulation phase or has been annuitized.
Still in the accumulation phase
If you haven't started receiving payments, the annuity has an account value.
Your RMD is calculated the same way as an IRA: prior December 31 account value ÷ your IRS life expectancy factor.
You can take the distribution as a partial withdrawal from the annuity contract, as long as the contract allows it. Some older contracts impose surrender charges — check your contract terms before requesting a withdrawal.
Annuitized — you're already receiving payments
If the annuity has been annuitized, you're receiving a stream of periodic payments rather than drawing from an account balance.
In most cases, the annuity payments themselves satisfy your RMD — as long as the payment schedule meets IRS requirements. Specifically, the payments must be made at least annually and cannot extend beyond your life expectancy (or your joint life expectancy with your beneficiary).
Your annuity company should confirm whether your payment schedule qualifies. If it does, no additional withdrawal is required.
QLACs: Deferring RMDs Into Your 80s
A Qualified Longevity Annuity Contract (QLAC) is a specific type of deferred income annuity that comes with a meaningful tax benefit: the premium you invest in a QLAC is excluded from your RMD calculation until the annuity begins paying out — up to age 85.
The basics
- You purchase a QLAC inside a Traditional IRA or qualified plan
- The amount invested is excluded from your account balance for RMD purposes
- Payments must begin by age 85 at the latest
- Once payments begin, they satisfy the RMD obligation for the QLAC portion
The 2023 contribution limit change
SECURE 2.0 made two important updates to QLAC rules effective in 2023:
| Rule | Before SECURE 2.0 | After SECURE 2.0 |
|---|---|---|
| Dollar limit | $145,000 (inflation-adjusted) | $210,000 (inflation-adjusted; $210,000 for 2026) |
| Percentage limit | 25% of account balance | Eliminated |
The removal of the 25% cap is the bigger change — previously, someone with a $400,000 IRA could only put $100,000 into a QLAC even though the dollar limit was higher. That restriction is gone.
Is a QLAC right for you?
That's a question for your financial advisor — it depends on your income needs, health, other assets, and tax situation.
What SimpleRMD can help with: once you've set up a QLAC, we can track which portion of your account balance is excluded from RMD calculations and adjust your annual distribution accordingly. See how it works.
Aggregation: Can Annuity RMDs Be Combined?
If you have multiple IRAs — one of which is an annuity — the standard aggregation rules apply.
You calculate the RMD for each IRA separately, but you can take the total combined amount from any one (or combination) of your IRAs.
If your annuity is still in the accumulation phase
No special rules apply. The account value rolls into your total IRA balance and you aggregate normally.
If your annuity has been annuitized
This is where it gets more nuanced. The traditional rule was that an annuitized IRA must satisfy its own RMD through its payment stream — you couldn't take that portion's RMD from a separate IRA.
SECURE 2.0 introduced an optional approach that changes this for some people: you may now be able to combine the annuitized contract's fair market value with your other IRA balances for a single total RMD calculation. If your annuity payments exceed what the annuitized portion alone would require, that excess can potentially count toward your other IRAs' obligations — reducing how much you need to withdraw elsewhere.
This is a planning opportunity worth knowing about, but it requires a year-end valuation from your annuity provider (the calculation isn't automatic), and the rules are technical enough that a tax professional should confirm the math. Don't assume your provider will apply this automatically — most won't without a specific request.
If this situation applies to you, bring it up with both your annuity provider and your CPA before year-end.
Common Questions
My annuity is in a Roth IRA. Do I still owe RMDs?
No. Roth IRAs have no lifetime RMD requirement for the original owner. The annuity's tax status follows the account it's held in. See: Roth IRA RMD rules
My annuity has surrender charges. Can I avoid taking the RMD?
No — you cannot skip an RMD because of surrender charges. If your contract prevents distributions without penalty, contact your annuity provider. Most insurers will waive surrender charges on RMD amounts. If not, the IRS penalty for missing the RMD still applies.
My annuity provider calculates my RMD. Is their number reliable?
Providers typically calculate based on the account value they hold — but if you have multiple IRAs elsewhere, they can't account for those. You're responsible for ensuring the correct total RMD is taken across all accounts. See: Does my accountant calculate my RMD?
Do nonqualified annuity payments count toward my IRA RMD?
No. Nonqualified annuity distributions are separate from your IRA RMDs. They don't satisfy your qualified account obligations.
What to do next
- Run the calculator — calculate your IRA RMD, free, no account required
- RMD rules by account type — how rules differ across IRAs, 401(k)s, Roth accounts, and more
- How to calculate your RMD — step-by-step walkthrough
- RMD tables explained — find your life expectancy factor
- Does my accountant calculate my RMD?
This article is for informational purposes only and does not constitute tax, legal, or financial advice. IRS rules and tax laws are subject to change. Consult a qualified tax professional or financial advisor for guidance specific to your situation. SimpleRMD is a calculation and tracking tool — not a financial advisory service.
Sources: IRS Publication 590-B (2025); IRS Publication 575 (2024); SECURE 2.0 Act of 2022 (Pub. L. 117-328); IRS.gov — Retirement Topics: Required Minimum Distributions. Rules confirmed current as of 2026.