02.12.20
FINRA Issues RMD Alert on Secure Act Changes
by: Melanie Waddell
New required minimum distribution (RMD) rules under the Setting Every Community Up for Retirement Enhancement Act of 2019, or the Secure Act, are prompting regulators to alert investors as well as broker-dealers and advisors to some “tricky” new requirements. FINRA for instance, just released an “updated” Investor Alert that answers questions on brokerage firms’ reporting obligations with respect to RMDs as well as whether an investor needs to take an RMD if they own an annuity. The answer: It depends. As to whether investors must take an RMD if they own a variable annuity, and it’s held in an IRA, the answer is yes, FINRA states. “This is referred to as a ‘qualified annuity’ by the IRS, meaning that it likely was funded with pre-tax money that requires you to pay taxes on your withdrawals, as well as take RMDs,” the FINRA alert explains. “Non-qualified annuity contracts offer tax-deferred growth of after-tax funds; they are taxed when annuitized, but as a general rule are not subject to RMDs.”
Read the full article on Think Advisor