How is the value of an annuity calculated once you have started to receive payments in order to determine the IRS required minimum distributions?

Great question.

We are not tax / financial advisors, but will try to provide some information that points you in the right direction and enables you to present good questions to your advisors.

The relevant section of the IRS code appears to be: Treas. Reg. section 1.401(a)(9)-6, Q&A12

Note that there appear to have been some relevant modifications to the IRS code in 2006.

At the highest level, there is a process involved for calculating what is referred to in the code as “entire interest” under an annuity contract. The entire interest calculation appears to have 3 general components:

1) the dollar amount credited to the beneficiary (you) under the annuity contract. In other words, the value of your annuity contract as of a certain date. This date is most likely December 31 of the previous calendar year. This contract amount may be provided by the insurance company that offers the annuity.

2) The 2006 modification seems to address benefits that may be in excess of the amount credited under the contract. The first part of these potentially “excess” benefits involves death benefits that might be available under your contract. The actuarial value (likely provided by the insurance company) of any death benefits may need to be included in the overall valuation.

3) Similarly, any guaranteed living benefit features that are included in the contract may need to be incorporated into the overall valuation. Again, this analysis and valuation may be available through the insurance company / your financial advisor.

This is pretty high level info. Hopefully of some help. Please feel free to comment further.