I appreciate the information.
On Thu, Jul 3, 2025 at 4:14 PM Stan Brown (using GC 4.14) < [email protected]> wrote: > On 2025-07-03 13:39, R Losey wrote: > > On Thu, Jul 3, 2025 at 1:17 PM Stan Brown (using GC 4.14) > > <[email protected] <mailto:stan%[email protected]>> wrote: > > > > On 2025-07-02 15:42, David Cousens wrote: > > > I personallywould regard the increase in Fair Market Value as an > > > increase in the fund, but I think it would be better to get the > > opinion > > > of a practising accountant in your jurisdiction. > > > > Hi, David. > > > > Earlier, I couldn't articulate why I wanted to account for annual > > changes in FMV, but it came to me this morning as I was reading your > > reply from yesterday. The FMV as provided by New York Life is part of > > what determines my RMD (how much I must withdraw from IRAs in the > coming > > year). So I think that needs to be in my books one way or another. > One > > possibility is simply to enter a description-only entry (debit=0, > > credit=0) each year when I receive the statement. Another is to > record > > the increase or decrease in Equity:Unrealized Gains and Losses -- > > unrealized by me, of course; they may very well be realized by New > York > > Life. > > > > (Fairly recent legislation allows (1) aggregating the annuity FMV > and my > > brokerage FMV, (2) determining the overall RMD based on the IRS's > life > > expectancy table, and then (3) making total withdrawals from the two > to > > fulfill the RMD. In my case, the annuity payments are greater than > the > > annuity's "share" of the RMD, so that I can reduce withdrawals from > the > > brokerage below what would otherwise be the brokerage's "share". > Since > > the IRA in the brokerage grows tax deferred, postponing withdrawals > is a > > good thing.) > > > > > > Right. You absolutely need to keep up with dividends in things like > > IRAs. However, part of the FMV is the price of the thing; that isn't as > > critical, in my opinion, as (at least here), the RMD is calculated from > > the price at the end of the year. I choose not to use the quote option, > > and just have the prices update as transactions occur. > > > > But (and this is where I am uncertain about annuities), I'm not sure > > there is any point in doing this for an annuity... You actually don't > > own it any longer... they just have to pay you a monthly income, > > regardless of whether it gains or loses money. You could, if you wanted > > to, treat the money that was used to set up the annuity as an annuity > > setup expense, and then just have the monthly money coming in as annuity > > income. It's rather like a salary in that respect, except that you gave > > them a fixed amount of money, and they pay you regularly. > > I'm not quite clear what your "doing this" refers to. If you mean > tracking the details of the change in FMV, I agree that it seems kind of > pointless because it won't affect the income I receive from New York > Life in the following year. > > But if you mean paying attention to the FMV itself, without inquiring to > where it comes from, then that's important to computing the RMD on my > Vanguard IRA. Here's an example: > > Assume that the IRS says, based on my age, I must withdraw 6% of my IRA > as an RMD. Assume the annuity FMV is $100,000 and the IRA holds $300,000. > > Under old legislation the annuity must pay me at least 6% ($6,000), and > I must withdraw at least 6% ($18,000) from my IRA. But the annuity pays > me $10,500, on a schedule and not on my demand. So my total retirement > withdrawal is $10,500+$18,000 = $28,500. > > But under the newer legislation (The Secure 2.0 Act of 2022), I > aggregate $100,000+$300,000 = $400,000, and my combined RMD is 6% of > that, $24,000. The annuity will pay $10,500, and I need withdraw only > $24,000-$10,500 = $13,500 from the IRA. Thus I defer income tax on the > $4,500 difference to a later year, which is a good thing. > > > > https://irahelp.com/slottreport/new-law-could-reduce-rmd-rules-annuitized-annuities-proper-valuation-needed > > > > Excerpt: > > > > "[Before Secure 2.0] ... For the other (non-annuitized) funds, RMDs are > calculated under the usual rule (prior- year 12/31 account balance divided > by the owner's life expectancy factor). But for the annuitized part, the > annuity payments received during a year are considered the RMD for that > year. > > "This amount of total payments is typically much larger than the RMD > that would be required if the annuitized part was determined under the > usual RMD method. However, before SECURE 2.0, this overage couldn't be > credited against the RMD for the other IRA funds. In other words, there > were two separate RMDs - one for the annuitized portion and one for the > remaining funds - that couldn't be aggregated. > > > Stan Brown > Tehachapi, CA, USA > https://BrownMath.com > -- _________________________________ Richard Losey [email protected] Micah 6:8 _______________________________________________ gnucash-user mailing list [email protected] To update your subscription preferences or to unsubscribe: https://lists.gnucash.org/mailman/listinfo/gnucash-user ----- Please remember to CC this list on all your replies. You can do this by using Reply-To-List or Reply-All.
