Annuities and RMDs: how they interact.

Which annuities have required minimum distributions?

A required minimum distribution is the amount federal law forces you to withdraw from pre-tax retirement accounts each year once you reach the trigger age. The government deferred tax on that money for decades; RMDs are how it finally collects. Whether your annuity is caught by that rule depends entirely on the wrapper around it.

A qualified annuity, held inside a traditional IRA, 401(k), 403(b), or similar plan, is subject to RMDs like everything else in the account. The annuity does not exempt the money, slow the clock, or change the deadlines. It lives under the account's rules.

A non-qualified annuity, bought with savings you already paid tax on, has no lifetime RMDs for the owner. That freedom to keep deferring is one of the honest advantages of holding an annuity outside a retirement account. Growth is still tax-deferred, never tax-free, and beneficiaries face their own distribution rules after your death. The full qualified versus non-qualified picture is laid out in our post on how annuities are taxed.

Roth accounts are the exception inside the exception. A Roth IRA has no lifetime RMDs for the original owner, and under current law designated Roth accounts in workplace plans no longer have them either. An annuity inside a Roth IRA inherits that treatment.

When do RMDs start, and how is an annuity counted?

Under current federal law, RMDs begin the year you turn age 73, and the starting age rises to 75 in 2033. Your first RMD can be delayed until April 1 of the year after you reach the trigger age, but delaying means taking two distributions in one year, which can push you into a higher bracket.

The standard math divides each account's prior December 31 value by a life expectancy factor from the IRS tables. Annuities complicate the numerator. A deferred annuity that has not been annuitized counts at its year-end fair market value, and under Treasury rules that value can include the actuarial present value of extra benefits such as guaranteed income riders or enhanced death benefits. The insurer reports this figure to your custodian each year, and it can run higher than the walk-away cash value. A bigger reported value means a bigger required withdrawal.

Missing an RMD is expensive. The excise tax on the shortfall is 25% under current law, reduced to 10% if you fix it within the IRS correction window, and the IRS can waive it for reasonable cause. Those figures are set by statute and can change; confirm the current numbers with a licensed tax advisor.

How does annuitizing change the RMD math?

Annuitizing means converting the contract into a stream of scheduled payments, often for life. Once a qualified annuity is annuitized, it leaves the account-balance calculation entirely. Instead, the payments themselves generally satisfy the RMD for that contract. You do not compute a separate required amount on money that is already being paid out on an actuarial schedule.

The trap has always been the money next door. Historically, annuitized payments could not be counted against the RMDs owed on your other, non-annuitized IRAs, so retirees who assumed one generous annuity payment covered everything ended up short. Recent federal rules now permit combining annuitized payments with the RMD math for other accounts of the same type in some situations, but custodians apply the aggregation rules differently and the details matter. Before you rely on an annuity payment to cover any other account, get the treatment confirmed in writing by your custodian and a licensed tax advisor.

For retirees who want part of their savings converted into a dependable paycheck anyway, this interaction is a quiet point in annuitization's favor: the income does the RMD work for that slice automatically, every year, with no table lookups. How lifetime payments are built, and what each payout option costs, is covered in our guide to guaranteed lifetime income.

Any lifetime income guarantee is backed by the claims-paying ability of the issuing insurer. It is not FDIC-insured and not a bank deposit.

How does a QLAC push RMDs back?

Congress built one deliberate RMD exception into the annuity world. A qualified longevity annuity contract, or QLAC, is a deferred income annuity purchased inside an IRA or workplace plan. Money moved into a QLAC, up to the federal limit of $210,000 for 2026, indexed over time, is excluded from your RMD calculation until the QLAC's income begins, which you can defer as late as age 85.

The effect is twofold. Your required withdrawals in your 70s shrink, because the QLAC money is out of the math, and you lock in a paycheck for the years when the risk of outliving your savings is highest. It is longevity insurance, not a loophole: the income is fully taxable as ordinary income once it starts, and you give up access to the money while you wait. The mechanics, trade-offs, and who a QLAC actually suits are covered in our post on what a QLAC is.

QLAC guarantees are subject to the claims-paying ability of the issuing insurer and are not FDIC-insured. The dollar limit is set by statute and changes over time.

Annuities and RMDs, side by side

Federal rules summarized from IRS Publication 590-B, Publication 575, and related guidance. RMD ages, penalty rates, and the QLAC limit are set by statute and change over time. State rules vary. This is education, not tax advice; confirm your numbers with a licensed tax advisor.

What RMD mistakes catch annuity owners?

Most of the pain in this corner of the tax code comes from a few predictable missteps.