Masterdex 10 RMD questions PLEASE HELP

[BUCKEYE]

I have a 50,000 annuity from Masterdex 10. I will be 70-1/2 in October. My question is
if I choose quarterly RMD; The second quarterly payment would not be received until 2020. Will that mess up my taxes? Or is it better to do annual RMD since I will beginning in October of this year and to be age 70-1/2 in October 2019.

Allianz said I could sign up for monthly/quarterly/annual, I was adding it up and it looks like I would receive more money by doing it monthly or quarterly. Thank you for taking the time to help me. Its not a big one in your eyes, but will be something for me financially.

When I start (annuitizing) taking money out now, is that the same as RMD?. I will be doing this for life until it all runs out. It has been a frustrating product, but I left it alone for 15 years, and now it will be time for RMD,
so want to just withdrawl each year until it runs out and has paid me all that it is worth.

Any insight to help me understand a bit better, is surely appreciated. The interest rate isnt much now, so I just want this to all end, without giving up all that I have earned.

Thank you!

 

[jasperjohns]

Wow this is a lot of questions. First I would recommend you get the advice of someone locally to walk you through this but I will do my best to answer your questions.

First question regarding frequency of withdrawals to start. You should take this years as a lump sum because any distribution you receive in the next calendar year will not count for the current year. This rule is true every year but your first for a number of reason I will not go into but it is simply a good habit to take all of your RMD in a calendar year.

Second, if you annuitize the contract then that could affect your RMD calculation because technically you no longer have a FMV. Another complex explanation. Ask ALLIANZ about this or a local financial planner. Your bank may be able to provide a planner for free or your cpa may be some help as well.

Final question. Annuitizing is not the same as your RMD. It may or may not fulfill the RMD for the first year. These are all very complex topics. For this question you can ask ALLIANZ and they should be able to help. I do not know your situation so I do not want to recommend one distribution method over another.

A final recommendation would be to reach out to someone in the Garrett Financial Planning Network and for a fee they will help you through this. You only need one sit down to resolve all of this. If you attempt to navigate this yourself you may not even know what additional questions to ask as ALLIANZ does have a couple of quirks that make their products different from many other Indexed Annuity carriers. Good luck.

 

[BUCKEYE]

Thank you for your informed answers. I have one more question that would be helpful to know: I will be happy to begin reducing my Masterdex 10 until it is gone. It will take 10 years, but my question is : Would it be better to do penalty free withdrawls every year, or should I just begin annuitizing at age 70-1/2 until it is all withdrawn.

 

[BeeSelective]

I believe you have to take an rmd before April 15, following the year you attain age 70 1/2. So by April 15, 2020, you have to receive a rmd. You have to take another by December 31, 2020. Then you have one per year, however you choose to take it.

 

[pfg1]

Thank you for your informed answers. I have one more question that would be helpful to know: I will be happy to begin reducing my Masterdex 10 until it is gone. It will take 10 years, but my question is : Would it be better to do penalty free withdrawls every year, or should I just begin annuitizing at age 70-1/2 until it is all withdrawn.

Depending on the annuitization options you have (and choose), if you annuitize the contract (not using an income rider) and you die, they may keep the remaining money.

If you do penalty free withdrawals of 10% of the contract value, the beneficiary would get the remainder if you die prior to all the funds being paid out.

If you have an income rider and turn on income, you may not get as much $ as you want. Payout may be around 6% +/- (but based on the income account value, which is likely higher than the contract value), but it would be for life. Beneficiary would get the remainder as well. (you may not have an income rider)

Any way you slice it, the RMD will be covered if you take the money. I think its like 3.65% at 70.5

 

[Tahoe Ray]

If I recall correctly, Masterdex 10 is a two tier annuity, meaning that you have an annuitization value that is much higher than your actual cash value.

Depending on how old the contract is, you may be able to take 10% of annuitization value (without annuitizing) but don't confuse that with the 10% free withdrawal provision (which may be calculated based on account value).

You'll want to see what happens to the annuitization value on death as well (if you're only withdrawing RMDs) because if that value is only cash value, you may be better off electing a period certain (10 years) and just paying the taxes to get your money out (again, depending on the difference between the values).

This can be really confusing so you should talk with an agent and the carrier to come up with the best solution for your personal situation (and then loop in your accountant).

Good luck.

 

[Allen Trent]

I believe you have to take an rmd before April 15, following the year you attain age 70 1/2. So by April 15, 2020, you have to receive a rmd. You have to take another by December 31, 2020. Then you have one per year, however you choose to take it.

many times, telling someone it is OK to wait to take their 1st RMD as you suggest is bad advice. This is because it will cause them to have to take 2 RMDs in that same tax year. they would be taking the one they delayed taking for their 1st year & also the one due for the current year. For some, depending on the amount of the checks, this could cause them to be bumped into a higher tax bracket, pay taxes on a greater portion of the Social Security checks & possibly owe more for their Medicare premiums as those are based upon income.

in many cases, it is best to take your full RMD due in that tax year you turn 70 1/2

If I was this client, I would likely take the full RMD now & set up monthly direct deposit of RMD starting in January. the RMD would then be deposited for the exact same amount each month & then the next January it would automatically adjust to the higher amount as the RMD changes. This is assuming they choose RMD as their systematic withdrawal selection on the paperwork & don't write in a specified fixed dollar amount

 

[Allen Trent]

you may also be owed additional choices and money as many of those older Allianz contracts were part of class action lawsuits & pressure from many states Attorneys General, resulting in Allianz offering special programs to those customers.

Allianz to Pay $10 Million in Multi-State Suitability Settlement | ThinkAdvisor

 

[indexedannuity_girl]

As Tahoe Ray suggested, this is a two-tiered annuity. RMDs are available with no penalty to the client, that being said. The brochure for the product indicates "TAKE REQUIRED MINIMUM DISTRIBUTIONS. Required minimum distributions from a tax-qualified plan (IRA, SEP, etc.) will qualify as a free withdrawal if taken annually in December or monthly throughout the year. Contract values and the amount available for free withdrawal will be reduced by the distribution amount withdrawn."