Quick Answer: Annuity RMD Rules
Qualified annuities held inside a traditional IRA or 401(k) are subject to RMDs starting at age 73 under current law – non-qualified annuities held outside retirement accounts have no RMD requirement at all.
Last updated: March 2026 | Reviewed by: Elizabeth Prescott, AnnuityJournal Editorial Team
Required minimum distributions are one of the most misunderstood aspects of annuity ownership. The rules differ significantly depending on whether your annuity lives inside a retirement account or outside one – and getting this wrong can trigger a 25% IRS penalty on the amount you failed to withdraw. Here is exactly how it works.
The Difference Between Qualified and Non-Qualified Annuities
Before getting into the rules, the most important distinction is whether your annuity is qualified or non-qualified:
- Qualified annuity: Purchased inside a traditional IRA, SEP IRA, 403(b), or 401(k). Funded with pre-tax dollars. Subject to RMD rules.
- Non-qualified annuity: Purchased with after-tax money outside a retirement account. Not subject to RMD rules.
The annuity itself is not what triggers RMDs – the account type is. A MYGA inside a Roth IRA? No RMDs. The same MYGA inside a traditional IRA? RMDs apply. Learn more in our guide on annuities inside an IRA.
Current RMD Age Rules (SECURE 2.0)
The SECURE 2.0 Act, signed into law in December 2022, changed the RMD start age from 72 to 73, effective for people who turn 72 after December 31, 2022. The schedule going forward:
| Birth Year | RMD Start Age |
|---|---|
| 1950 or earlier | Already required to take RMDs (started at 70½ or 72) |
| 1951-1959 | Age 73 |
| 1960 or later | Age 75 (effective starting 2033) |
Your first RMD must be taken by April 1 of the year following the year you reach the applicable age. After that, each subsequent RMD must be taken by December 31 of each year. Delaying the first RMD to April 1 means you will take two distributions in that second year, which can push you into a higher tax bracket.
How RMDs Are Calculated for Annuities
Annuities in Accumulation Phase (MYGAs, FIAs, Variable Annuities)
If your annuity is still in the accumulation phase – meaning you haven’t annuitized it yet – the RMD is calculated the same way as any IRA account:
RMD = Account Value on December 31 of prior year ÷ Life Expectancy Factor from IRS Uniform Lifetime Table
For a 75-year-old with a $200,000 MYGA inside a traditional IRA, the IRS Uniform Lifetime Table factor is 24.6. That means the RMD is approximately $8,130 for the year. Most carriers allow free withdrawals up to 10% annually without surrender charges, so this typically does not trigger a penalty from the insurance company.
Annuities Already Annuitized (SPIAs, DIAs, Income Riders)
If you have annuitized the contract – meaning you’ve converted it to a stream of income payments – the regular income payments automatically satisfy RMDs as long as the total annual payments equal or exceed the calculated RMD amount. You do not have to do a separate RMD calculation.
This is one reason a qualified SPIA inside a traditional IRA is administratively simple: the insurance company sends you monthly checks, and that satisfies the IRS requirement without any manual calculation.
RMDs and Fixed Indexed Annuities with Income Riders
This is where it gets more nuanced. A fixed indexed annuity with a GLWB (guaranteed lifetime withdrawal benefit) rider has two values: the account value and the benefit base. RMDs are calculated on the account value only – not the (usually larger) benefit base.
If your annual income rider withdrawal exceeds your RMD, the rider payment satisfies the RMD. If the RMD would be larger than the income rider payment, you can typically take the excess from the account value without triggering surrender charges, as most carriers have RMD-friendly provisions built in. Check your specific contract or ask your carrier directly.
Penalty for Missing an RMD
The penalty for failing to take a required minimum distribution was reduced from 50% to 25% under SECURE 2.0. If you take the missed RMD in a timely manner (within two years), the penalty drops further to 10%. Still, this is avoidable with basic planning.
If you missed an RMD, file IRS Form 5329 and request a waiver for reasonable cause. The IRS has historically been lenient on first-time errors, especially when the missed amount is taken promptly.
Strategies for Managing Annuity RMDs
Use a Qualified Longevity Annuity Contract (QLAC)
A QLAC is a specific type of deferred income annuity you can purchase inside a traditional IRA that temporarily reduces your RMD burden. Under current rules, you can move up to $200,000 (indexed for inflation) from your IRA into a QLAC and exclude that amount from your RMD calculation until income begins – up to age 85.
This is particularly useful for retirees who don’t need income immediately but want to reduce current taxable distributions while creating a late-stage income guarantee.
Convert Non-Qualified Assets First
If you have both qualified and non-qualified annuities, consider spending down qualified accounts first to reduce future RMD exposure. Non-qualified annuities have no RMD requirement and provide tax-deferred growth for as long as you hold them.
Take RMDs Early in the Year
Waiting until December puts you at risk of forgetting or facing other financial complications. Taking the RMD in January or February avoids the year-end rush and gives you more predictable cash flow planning.
Non-Qualified Annuities: No RMDs, But Different Tax Rules
Non-qualified annuities have no RMD requirement, but they are not entirely tax-free either. When you make withdrawals from a non-qualified annuity, the IRS taxes earnings first (LIFO – last in, first out). Your basis (the premiums you paid) comes out tax-free; the growth comes out as ordinary income.
See our full guide on how annuities are taxed for a complete breakdown of non-qualified vs. qualified tax treatment.
Annuities and RMDs: Key Takeaways
- Qualified annuities in a traditional IRA or 401(k) require RMDs starting at 73
- Annuitized contracts generally satisfy RMDs automatically through regular payments
- FIAs with income riders calculate RMDs on account value, not benefit base
- Missing an RMD carries a 25% penalty (down from 50% under SECURE 2.0)
- A QLAC lets you defer up to $200,000 from RMD calculations until age 85
- Non-qualified annuities have no RMDs but earnings are taxed as ordinary income on withdrawal
For a deeper look at how different annuity types are taxed, visit our qualified vs. non-qualified annuity guide.
Frequently Asked Questions
Do I have to take an RMD from an annuity inside my IRA?
Yes, if the annuity is inside a traditional IRA. The RMD rules apply to the account, not the investment inside it. Annuities inside Roth IRAs are exempt from RMDs.
Does an annuity income payment satisfy RMDs?
Yes. If you have annuitized the contract (converted to income payments), those payments automatically satisfy your RMD requirement as long as they equal or exceed the calculated RMD for that year.
What is a QLAC and how does it reduce RMDs?
A Qualified Longevity Annuity Contract (QLAC) lets you move up to $200,000 from your IRA into a deferred income annuity that starts income as late as age 85. The amount moved into the QLAC is excluded from your RMD calculation until income begins, reducing current taxable distributions.
What happens if I miss an RMD from my annuity IRA?
The IRS imposes a 25% excise tax on the amount not distributed (reduced from 50% under SECURE 2.0). If you correct the error within two years, the penalty drops to 10%. File Form 5329 and request a waiver – the IRS frequently grants it for first-time errors.
Can I aggregate RMDs from multiple IRAs?
Yes. If you have multiple traditional IRAs (including IRA annuities), you can aggregate the RMDs from all accounts and take the total from any one or combination of those accounts. This is useful if one account is an annuity with surrender charges – you can satisfy the RMD by withdrawing from a more liquid IRA.
Sources & Citations
- IRS, Required Minimum Distributions (RMDs) – official RMD rules, ages, and calculation methods
- IRS, IRS Publication 590-B: Distributions from Individual Retirement Arrangements – Uniform Lifetime Table and calculation guidance
- U.S. Congress, SECURE 2.0 Act of 2022 – legislation changing RMD age to 73 and reducing penalties
