The short answer
Whether an annuity is subject to required minimum distributions depends on whether it is held inside a tax-qualified retirement account. An annuity held in a traditional IRA or 401(k) is subject to RMD rules just like other assets in those accounts, meaning you must begin taking minimum distributions at the required age. A non-qualified annuity, bought with after-tax money outside a retirement account, is generally not subject to RMDs. So the annuity itself does not create or avoid RMDs; the account it lives in does.
So qualified annuities follow RMD rules like the rest of the retirement account, while non-qualified annuities generally do not have RMDs.
How RMDs apply
If your annuity is inside a traditional IRA or employer plan, its value is part of what determines your required minimum distribution once you reach the RMD age, and income payments from an annuitized contract can count toward satisfying the RMD for that account. A special case is the QLAC, which can defer some of that requirement. Our guide to QLACs covers that, and our guide to RMDs and IRMAA covers how RMD income affects Medicare costs.
The account type, not the annuity label, decides whether RMD rules apply and how the payments interact with them.
Why it matters
Understanding whether your annuity has RMDs helps you plan taxable income in retirement and avoid penalties for missed distributions. Because the rules interact with your other retirement accounts and taxes, and a QLAC can change the picture, review your situation with a licensed professional and tax advisor. This is educational information, not tax advice.
The takeaway: annuities in qualified accounts follow RMD rules, non-qualified annuities generally do not, and a QLAC can defer part of the requirement — confirm the details with a professional.
Frequently Asked Questions
Do annuities have required minimum distributions?
It depends on the account. An annuity in a traditional IRA or 401(k) is subject to RMD rules, while a non-qualified annuity bought with after-tax money outside a retirement account generally is not.
Does annuity income count toward my RMD?
Income payments from an annuitized contract inside a qualified account can count toward satisfying the RMD for that account. A QLAC can defer part of the requirement.
How do I avoid an RMD penalty with an annuity?
Know whether your annuity is in a qualified account subject to RMDs and take the required distributions on time. Because rules interact with your other accounts, consult a professional.
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