Speak with a Registered Agent: 1-866-223-2121

Speak with a Registered Agent: 1-866-223-2121

Allianz Addresses RMD Challenges


Required minimum distributions, or RMDs, activate for retirement account holders at the age of 70 ½, and for those who don’t need the money that the government requires them to take, they can be problematic. A solution to this unavoidable conundrum isn’t always obvious, but one insurer is trying to fix that. 

RMDs mandate that retirement account holders, aged 70 ½ and older, withdraw and pay tax on a percentage of an individual retirement account or 401(l). According to a recent article from InsuranceNewsNet, Allianz Life Insurance Co. of North America is launching an indexed annuity targeted specifically at this demographic. Allianz annuity owners who would rather keep their assets invested will have the option of automatically rolling the RMD payment into a second annuity, withholding the associated tax. The company will also pay a 25% bonus on funds in the second annuity, as an added bonus.

“I’ve never heard of anyone else doing this,” said Sheryl Moore, head of consulting firm moore Market Intelligence. “The No. 1 complaint I hear from annuity purchasers is, ‘I don’t want my RMD; why do I have to take it if I don’t want it?’”

The number of 50-69 year-olds taking RMDs is projected to increase by more than 27 million people over the next 20 years. This type of product could ultimately be a way for insurers to combat the effects of the so-called gray wave. A significant problem for financial institutions could arise given that up to $10 trillion in assets will be subject to mandatory withdrawals 2035, nearly a third of the $28.2 trillion held in all retirement accounts.

The insurers who solve this problem by creating “investor-friendly solutions may win the battle of asset retention,” according to a BNY Mellon report.

“We’re still at the front end of the boomer wave,” said Matt Gray, senior vice president of product innovation at Allianz Life, which sold the most indexed annuities in 2018. “I think you’ll see more of this type of solution, and more from us as well.

Legacy By Design, the new Allianz product, is two separate annuity contracts: the initial tax-qualified indexed annuity and a non-qualified indexed annuity, which receives the RMD rollover, net of taxes. Purchasers are required to fill out one application and elect Allianz to automatically withhold RMD taxes or transfer the tax for the customer to pay directly. Allianz pays a 25% bonus in the form of a death benefit for heirs.

For more information on this, or other annuity products, contact AnnuityFYI. Visit our website, staging.annuityfyi.com, call us at 1-866-223-2121, or send us an email at support@annuityfyi.com.

Written by Rachel Summit

Follow Rachel, aka Finance Mama, on Twitter and Google+

For more information about the product mentioned in this article contact us here:

Newest Blog Posts

Information Request Form

If you have questions or would like more information, please complete this form and a licensed professional will be happy to help. For the fastest response, please select 'Phone' as your Contact Preference.

By providing your information and clicking 'Submit' above, you acknowledge that you have read and agree to this site's privacy policy. You also provide your consent to be contacted at the email address or phone number provided above (including any wireless number) by licensed agents or representatives from or on behalf of AFYI Holdings Group, LLC and other companies to provide the information requested and/or offer annuities or financial products. You understand that these calls or SMS messages may be generated using an automated telephone dialing system, a pre-recorded message, or artificial voice. Consent to receive such messages is not a condition to purchase any goods or services. You may opt out at any time by following the instructions in the messages you receive.  Receiving quotes and information through our website is free, and you are under no obligation to purchase any goods or services as a result of this request. You affirm that you are the subscriber of the provided telephone number or that the subscriber authorized you to provide the number. Message and data rates may apply. AFYI Holdings Group, LLC is committed to respecting your privacy and adhering to all applicable laws and regulations, including the Telephone Consumer Protection Act (TCPA).