Whether required minimum distributions apply to an annuity depends on how it was funded. Annuities held inside a pre-tax retirement account like a Traditional IRA, 401(k), or 403(b) are subject to the same RMD rules as any other qualified account. Annuities bought with after-tax money outside a retirement plan carry no federal RMD at all. Roth-held annuities sit in between, and the rules for Roth accounts inside employer plans changed in 2024.
Qualified Annuities: RMDs Apply
A qualified annuity is one held inside a tax-advantaged retirement account. Because the contributions went in pre-tax and grew untaxed, the IRS eventually requires distributions.
Under the SECURE 2.0 Act, RMDs now begin at age 73 for people who reach that age in 2023 or later. Anyone who turned 72 before January 1, 2023 stayed on the old schedule. The starting age rises again to 75 beginning in 2033. Your first RMD is due by April 1 of the year after you reach the applicable age; every RMD after that is due by December 31.1Internal Revenue Service. IRS Reminds Retirees: April 1 Final Day to Begin Required Withdrawals from IRAs and 401(k)s
Watch the first-year deadline. If you delay your very first distribution until April, you still owe the second one by December 31 of the same year, which can produce an unexpectedly large tax bill.
The amount is calculated by dividing the contract’s fair market value as of December 31 of the prior year by the distribution period from the IRS Uniform Lifetime Table.2Internal Revenue Service. Retirement Topics – Required Minimum Distributions (RMDs)
The Still-Working Exception
If you’re still employed and participating in your current employer’s 401(k) or 403(b), you can delay RMDs from that specific plan until the year you retire. The exception disappears if you own more than 5% of the sponsoring business, and it doesn’t cover IRAs or plans from previous employers.3Internal Revenue Service. Retirement Plan and IRA Required Minimum Distributions FAQs A qualified annuity sitting in an old 401(k) from a previous job follows the standard schedule.
Roth-Held Annuities: No Lifetime RMDs
Roth IRAs have never required distributions during the original owner’s lifetime, and that exemption is written into the statute.4Office of the Law Revision Counsel. 26 USC 408A – Roth IRAs An annuity inside a Roth IRA inherits that treatment.
Before 2024, Roth accounts inside employer plans were different: they did require RMDs. SECURE 2.0 Section 325 closed the gap. As of January 1, 2024, designated Roth accounts in 401(k)s, 403(b)s, and other employer plans are also free from RMDs during the account owner’s lifetime. If you hold a Roth annuity inside a 401(k), age alone no longer forces a distribution.
The exemption ends at death. Beneficiaries who inherit a Roth annuity still face distribution rules, though qualified withdrawals generally come out tax-free once the account has been open for at least five years.
Non-Qualified Annuities: No Federal RMD
A non-qualified annuity is bought with after-tax money outside any retirement plan. Because you already paid income tax on those dollars, the IRS imposes no age-based distribution schedule. You can leave the contract untouched as long as the insurer permits.
Earnings inside the contract still grow tax-deferred, and withdrawals are taxed on a last-in, first-out basis: gains come out first and are fully taxable until exhausted, then your original after-tax principal comes out tax-free.5Internal Revenue Service. Publication 575 (2025), Pension and Annuity Income
One boundary worth knowing: even without a federal RMD, the contract itself often sets a forced annuitization date, commonly around age 85 or 95 depending on the insurer. At that point the contract requires you to start payments or surrender the policy. This deadline is set by the insurer, not by federal law, so read the contract.
What Annuitization Does to the RMD
Annuitization converts a deferred contract’s balance into a stream of periodic payments, either for life or for a fixed period. For a qualified annuity, the scheduled payments themselves satisfy the RMD for that contract. You no longer run the Uniform Lifetime Table math on that account separately.
Partial Annuitization under SECURE 2.0
Before SECURE 2.0, partially annuitizing an IRA created a mismatch: the annuitized portion and the remaining balance were treated separately, often producing a total distribution that didn’t line up with what the owner would have owed on the whole account. Section 204 of SECURE 2.0 allows a unified calculation.6Internal Revenue Service. Internal Revenue Bulletin 2024-33
In practice, you calculate the total RMD for the whole account using the standard divisor, subtract the annuity payments you’re already receiving that year, and withdraw the difference from the non-annuitized portion. If the annuity payments alone meet or exceed the total RMD, nothing extra is owed from the remaining balance.
Combining RMDs Across Accounts
If you own several IRAs, you calculate each RMD separately but can take the combined total from whichever IRA you want. Three IRAs with a combined RMD of $15,000? You can pull all $15,000 from one of them.7Internal Revenue Service. RMD Comparison Chart (IRAs vs. Defined Contribution Plans) This is useful when a deferred annuity sits in one IRA and a liquid brokerage IRA sits in another: rather than triggering surrender charges, you can cover the annuity’s share by pulling more from the liquid account.
That flexibility ends once a qualified annuity is annuitized. Structured payments satisfy only the RMD for that contract, and you can’t count them toward RMDs on other IRAs or plug a payment shortfall from another account.
The same aggregation rule applies to multiple 403(b) tax-sheltered annuities. You cannot cross account types, however. An IRA RMD can’t be satisfied from a 403(b), and 401(k) plans don’t allow aggregation at all: each 401(k) distributes its own RMD from its own balance.7Internal Revenue Service. RMD Comparison Chart (IRAs vs. Defined Contribution Plans)
Using a QLAC to Reduce RMDs
A Qualified Longevity Annuity Contract is a deferred annuity whose value is excluded from the account balance used to calculate your annual RMDs, so it directly reduces required distributions until payments begin.
The rules are strict. Payments must start no later than the first day of the month after your 85th birthday. The contract can’t be variable or indexed. Once payments begin, you generally can’t surrender the contract for cash.8eCFR. 26 CFR 1.401(a)(9)-6 – Required Minimum Distributions for Defined Benefit Plans and Annuity Contracts
The 2026 lifetime cap on QLAC premiums across all your retirement accounts is $210,000.9Internal Revenue Service. 2026 Amounts Relating to Retirement Plans and IRAs, as Adjusted for Changes in Cost-of-Living – Notice 2025-67 SECURE 2.0 eliminated the older 25%-of-account cap, leaving the dollar limit as the only ceiling.
Inherited Annuities
Death changes the rules. What applies next depends on whether the annuity was qualified or non-qualified and who the beneficiary is.
Inherited Qualified Annuities
For deaths in 2020 or later, most non-spouse beneficiaries must empty the account by the end of the tenth year after the year of death.10Internal Revenue Service. Retirement Topics – Beneficiary If the original owner had already reached their required beginning date, the beneficiary must also take annual distributions during that ten-year window. If the owner died before reaching that date, no annual distributions are required, but the account still has to be empty by year ten.
“Eligible designated beneficiaries” can still stretch payments over their own life expectancy. That group includes surviving spouses, the account owner’s minor children (until they reach the age of majority), disabled or chronically ill individuals, and beneficiaries no more than ten years younger than the deceased owner. A surviving spouse has additional options, including treating the inherited account as their own.
Inherited Non-Qualified Annuities
Non-qualified annuities follow IRC Section 72(s). If the owner dies before payments have started, the full contract value must be distributed within five years.11Office of the Law Revision Counsel. 26 USC 72 – Annuities; Certain Proceeds of Endowment and Life Insurance Contracts A designated beneficiary can avoid that deadline by electing distributions over their own life expectancy and starting them within one year of the owner’s death. A surviving spouse can step into the owner’s shoes and continue the contract as their own.
Fixing a Missed RMD
Missing an RMD triggers a 25% excise tax on the amount you should have taken.12Office of the Law Revision Counsel. 26 USC 4974 – Excise Tax on Certain Accumulations in Qualified Retirement Plans On a $20,000 shortfall, that’s $5,000, on top of the regular income tax that will apply when you eventually take the distribution.
The rate drops to 10% if you correct the shortfall inside the IRS “correction window”: withdraw the missed amount and file the correct return before the IRS assesses the tax or sends a notice of deficiency, or by the end of the second tax year after the year you missed the distribution, whichever comes first.
Report the shortfall on Form 5329. If the miss was a reasonable error and you’ve already fixed it, you can request a full waiver of the excise tax by writing “RC” and the shortfall amount on the dotted line next to line 54, subtracting it from the calculated tax, and attaching a short letter explaining what happened and how you corrected it.13Internal Revenue Service. 2025 Instructions for Form 5329 – Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts The IRS grants these waivers regularly when the facts support it, particularly when a financial institution made the error or the owner was seriously ill.