RMD-Friendly Aggregate FIAs: Why Aggregation Beats Standalone for IRA Holders
Written & reviewed by Hans Goldstein, EA, Independent Licensed Insurance Producer · CA license 4273294 · NPN 20602398Admitted to practice before the IRS
Independently reviewed & last updated 2026-10-07
Quick take: IRS rules let you aggregate your IRA-funded annuities for RMD purposes. You calculate total RMD across all your IRAs, but can take it from one annuity if you want. This protects FIAs with growing account values from being forced into withdrawal. Below: how aggregation works, the carrier compliance rules, and when this strategy beats standalone FIA ownership.
The RMD problem for FIA owners
You're 73. RMD is ~3.77% of your IRA balance. If you have:
• $200K Athene Performance Elite FIA in IRA
• $200K Allianz 222 in IRA
• $100K cash in IRA
Without aggregation:
• Athene RMD: $7,540 from Athene FIA (potentially eating into account value during good crediting year)
• Allianz RMD: $7,540 from Allianz (interrupting rollup compounding)
• Cash RMD: $3,770 from cash
Total $18,850 RMD, split proportionally, hurting all 3 positions.
With aggregation:
• Total RMD calculated: $18,850
• Take ALL $18,850 from cash ($100K → $81K)
• Annuities untouched, continue compounding
• Allianz benefit base rollup unbroken
IRS aggregation rules (Treasury Regulation §1.408-8 Q&A-9)
Rule: IRA owners may aggregate RMDs across MULTIPLE IRAs and take the total from any single IRA or combination.
Includes:
• Traditional IRA accounts
• Inherited IRAs from spouse (if rolled into your own IRA)
• IRA-funded annuities
Excludes:
• 401(k) accounts (must take RMD from each plan separately)
• 403(b) accounts (separate calculation)
• Inherited IRA from non-spouse (separate)
• QLAC portion (deferred from RMD entirely until 85)
The aggregate-friendly FIA strategy
Step 1: Maintain a liquid IRA reserve
Keep $50-100K in a regular IRA (cash, money market, short MYGA) specifically for RMD funding.
Step 2: Buy FIAs alongside it
Both FIAs and the liquid reserve are IRA-funded. RMD aggregation applies.
Step 3: At RMD time, fund from liquid reserve only
- IRS rule allows it
- FIAs continue growing
- Income-rider benefit base rollups stay unbroken
- LTC waivers stay available
Step 4: When reserve depletes
After ~5 years, the liquid reserve runs out. At that point, take RMD from the FIA's free withdrawal provision (10%/yr free withdrawal covers RMD on most A-rated FIAs).
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Carriers that explicitly support aggregation
All major A-rated carriers support aggregation because IRS rules don't differ by carrier. However, the EASE of administration varies:
| Carrier | Aggregation friendliness | Notes |
|---|---|---|
| Allianz | ★★★★★ Excellent | Industry-standard administration |
| Athene | ★★★★ Good | Slow customer service for special requests |
| North American | ★★★★★ Excellent | Sammons mutual = strong service |
| Lincoln | ★★★★ Good | Public-company efficiency |
| Pacific Life | ★★★★★ Excellent | Mutual carrier excellence |
| Mass Mutual | ★★★★★ Excellent | A++ mutual standard |
| Smaller B+/B++ carriers | ★★★ Variable | Sometimes need manual coordination |
Aggregation vs standalone FIA
Scenario A: $400K total IRA, all in one FIA (standalone)
- RMD $15,000+/yr forced from that FIA
- Year 1 free withdrawal often 0% → may incur surrender charge
- Year 2+ 10% free withdrawal covers RMD but interrupts crediting
Scenario B: $400K total IRA, $300K FIA + $100K cash (aggregated)
- Total RMD $15,000 taken from cash bucket
- FIA undisturbed for 6+ years
- FIA account value compounds + benefit base rollup continues
- More wealth at end of period
Estimated 10-year advantage: $30,000-60,000 on a $400K IRA depending on FIA credit rate.
Income-rider FIAs benefit MOST from aggregation
If you own an FIA with income rider (Allianz 222, North American Charter Plus, F&G Safe Income Plus):
- Benefit base rollup is 5-7%/yr
- ANY withdrawal during deferral RESETS or REDUCES the benefit base
- RMDs taken from FIA could destroy the very income guarantee you bought the product for
Aggregate strategy keeps the benefit base intact + lets you preserve the income rider value.
When aggregation strategy DOESN'T work
❌ All your IRA money is in one FIA (no other IRA to aggregate from)
❌ You have 401(k) money (separate RMD rules)
❌ You're past 80 and need every dollar for income (just take RMD where convenient)
❌ Aggregating creates tax-loss harvesting opportunities you'd miss
CD vs MYGA, after tax
What $100,000 earns in 5 years: CD vs MYGA, after tax
Rates used: CD 5.00%, the top nationally available 5-year CD (Bankrate, October 14, 2026); change it to the rate you are offered. MYGA 5.95%, the best A-rated rate we track as of October 13, 2026: Delaware Life Pinnacle Plus 5-year (AM Best A-, negative outlook, 7/31/2026), $100,000 and up, effective October 6, 2026 (Delaware Life rate sheet).
| CD, interest taxed every year | $121,081 |
|---|---|
| MYGA, tax-deferred, before tax | $133,507 |
| MYGA after paying tax on all the interest at withdrawal | $126,136 |
| Tax deferral alone adds about | $674 |
| MYGA ahead of the CD, after tax | $5,055 |
Assumes 22% federal and 0% state income tax, no withdrawals, rates held for the whole term. MYGA interest is taxed as ordinary income when you withdraw it, not as capital gains. Gains taken before age 59 1/2 can owe a 10% IRS penalty, and cashing out early can cost a surrender charge.
In an IRA both grow tax-deferred, so the edge there is the rate alone. Bank and credit union deposits are FDIC or NCUA insured up to the limits; a MYGA is backed by the issuing insurer's claims-paying ability and your state's guaranty association up to its limits, not the FDIC. General education, not tax, legal or financial advice.
Where the RMD comes from in a down year
Aggregation lets you choose which IRA pays the RMD. That choice matters most in a bad market. Two hypothetical retirees each start with a $2,000,000 IRA and take $90,000 at the start of each year, using actual S&P 500 total returns (NYU Stern, Damodaran historical returns):
| Retiree | Years and returns | Balance after 5 years |
|---|---|---|
| A: good years first | 2003-2007: +28.4%, +10.7%, +4.8%, +15.6%, +5.5% | $3,023,570 |
| B: bad years first | 2000-2004: -9.0%, -11.9%, -22.0%, +28.4%, +10.7% | $1,283,412 |
Same $450,000 withdrawn, a $1.74 million difference, because B sold shares at the bottom to pay the IRS.
The fix is a rate bucket: hold 5 to 7 years of RMDs in a MYGA or other fixed asset inside the IRA, take the RMD from it when stocks are down, and refill it from stocks in up years.
Illustration: $400,000 in a 5-year MYGA at 5.85% (a June 2026 rate) grows to $531,514 with no withdrawals. An FIA is a poor fit for this job because caps reset yearly and surrender periods run 7 to 15 years.
What to do
- Before age 73, plan your IRA composition:
• 60-70% in FIAs/MYGAs for growth + protection
• 30-40% liquid for RMD funding - At 73, take aggregated RMD from liquid bucket only
- When liquid depletes (~age 78), transition to FIA free-withdrawal RMDs
This preserves rollup, avoids surrender charges, and maximizes the math.
213-414-2808 for an aggregation strategy review of your specific IRA composition.
Related reading
- QLAC Explained: defer RMDs entirely on $200K
- Best Annuity for RMD Strategy: broader RMD planning
- Income Rider Fee vs Payout Math: protecting the rider value
- Allianz 222 with PIV: flagship income rider FIA
Goldstein Complexity Index
Every annuity I review gets a complexity score from 0 to 100. Higher means harder to understand. Complexity is where buyers get hurt: riders they didn't know they were paying for, surrender charges that surprise them, and income "benefit bases" they took for cash. SPIAs and MYGAs score low. Products that stack a bonus, an income rider, an MVA and several crediting options score high.
This product's score: 8/100, Grade A+ (Transparent)
Easy to understand. Few moving parts. The buyer can fully explain the product to a friend after one read of the contract.
Score breakdown
| Dimension | Score (1-10) | What this measures |
|---|---|---|
| Riders | 1/10 | How many riders, optional or built in (income, death benefit, LTC). Each one adds cost and one more thing to understand. |
| Crediting strategies | 1/10 | How many index options (cap, spread, participation rate, step rate, volatility-controlled indices). More choices are harder to follow. |
| Surrender complexity | 1/10 | Length of the surrender period, plus any MVA and bonus recapture. The longer and more layered it is, the harder it is to know what leaving early costs. |
| Benefit-base separation | 1/10 | Whether there is a separate income base ("PIV") that is not cash but looks like it. This causes more buyer confusion than anything else. |
| Bonus structure | 1/10 | A premium bonus with a recapture schedule. The bonus is real, but you can lose part of it if you leave early. |
How to read this
- A+/A (0-40): Easy to understand. A pure accumulation FIA, a MYGA or a SPIA. Little room for mis-selling.
- B (41-60): Read the contract carefully and get a second opinion before signing. Income riders cause most of the confusion.
- C (61-80): Many owners don't fully understand what they bought. Common mis-sells: a bonus presented as cash, a benefit base presented as account value, surrender charges glossed over.
- D (81-100): Get an independent second opinion before signing. The product may still fit you, but the odds you later say "I didn't know it worked that way" are high.
Why it matters: nobody gets sued for selling a complicated product, but buyers regret them all the time. An annuity that wins your money in year one and confuses you for the next 14 is worse than a simpler one you understood from the start. Simple products are easier to check.
Renewal rate risk: FIA caps can change after year one
The cap you are quoted on a fixed indexed annuity is not locked like a mortgage rate. It covers the first crediting period, usually one year. At each contract anniversary the carrier can reset it anywhere above the contract minimum.
It works much like a high-yield savings rate: the bank can lower that next month, and the carrier can lower your cap next year. The reason is how caps are funded. The carrier puts most of your premium in bonds and uses part of the yield to buy index options.
When bond yields fall, that option budget shrinks and caps get cut. Caps were cut across the industry in the 2010-2021 low-rate years and came back after 2022.
The minimum cap is the only guarantee
Every FIA states a minimum guaranteed cap in the contract. Of the 99 FIAs we found that publish one, 86 let the insurer cut the cap to 1% or less, and some go as low as 0.25%. A few set 2% to 3%, and several insurers publish no number at all (FIA minimum cap data, checked October 4, 2026). Read that number before you sign.
Questions to ask before you buy
- "What is the minimum guaranteed cap in this contract?"
- "Can you show me this product's in-force renewal-rate history for the last 5 years?"
- "What cap are contracts sold in 2020, 2018 and 2015 getting today?"
- "If the cap drops to the minimum, what would I realistically earn each year?"
If the agent can't answer questions 2 and 3 with documents, you don't have enough information to buy yet.
How an FIA works, in plain terms
A fixed indexed annuity credits interest based on a stock index, with a cap on the upside and a 0% floor on the downside. A market drop can't reduce your account value, and in a big up year you only get the capped amount.
Example: $100,000 in an FIA with a 7% annual point-to-point cap on the S&P 500.
- S&P up 12%: you are credited the 7% cap, $7,000.
- S&P up 4%: you get the full 4%, $4,000.
- S&P down 20%: you get 0%, and the principal is untouched.
Where the cost sits: an FIA with no income rider has no explicit annual fee. The carrier pays for the floor by capping your upside. Surrender charges run 7-15 years if you pull out early, and most contracts let you take about 10% a year without a charge.
Quick FIA FAQ
Q: Will the cap rate change after I buy?
A: Yes. Caps renew every year, within the contract minimum. A 7% cap at purchase can be cut over time, down to the contract minimum, which on most FIAs that publish one is 1% or less. Check the minimum guaranteed cap in your contract.
Q: Why is my cap lower than my friend's FIA?
A: Carriers trade cap for other features: a premium bonus, a longer surrender period, an income rider or a bigger brand name. Two FIAs with similar headlines can be built very differently.
Q: What is the "minimum guaranteed cap"?
A: The lowest cap the carrier can set on your contract. On most FIAs that publish one it is 1% or less, some as low as 0.25%, and a few set 2% to 3%. With a 1% minimum, your worst case is close to 0% after inflation.
Q: How are FIA gains taxed?
A: Growth is tax-deferred. Gains are taxed as ordinary income when you withdraw them, and gain taken before 59½ usually carries a 10% IRS penalty.
Q: Can I lose money?
A: Not from a market drop. You can lose money by surrendering early (surrender charge) or through a market value adjustment. Hold to the end of the surrender period and neither applies.
Q: How long is the surrender period?
A: It varies: 7 years on some (Athene PEC 7 Plus), 10 on most, 14 to 15 on bonus products. A longer surrender period usually buys a higher cap or a bigger bonus.
Q: What's the difference between cap, participation rate, and spread?
A: The cap is the most you can be credited. The participation rate is the share of the index gain you get. The spread is a percentage subtracted from the index gain. Some products combine them. See How Annuity Crediting Actually Works.
Q: Should I add an income rider?
A: Only if you will actually turn it on for lifetime income. The fee (0.85% to 1.50% a year) is charged whether you use it or not, and plenty of owners pay it for years and never do.
Get a second opinion before you sign
Talk to Hans Goldstein, a licensed independent insurance producer.
A fixed indexed annuity ties up your money for 7 to 15 years. Cap rates renew annually and can drop. Income riders have separate benefit bases that aren't cash. Get an independent review before you commit your retirement savings to a multi-year contract.
Send your details. Within one business day you get a written review of your quote, a side-by-side with two alternatives, and a free 15-minute call if you want one.
Rather talk it through? Or book 15 minutes on Hans’s calendar, or call 213-414-2808.
Hans Goldstein · 213-414-2808 · NPN 20602398, independent licensed insurance producer appointed with multiple A-rated carriers
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Disclosure
This review is based on the carrier's public product materials and rates as of the date shown above. Annuity rates, caps, participation rates, payout factors, crediting methods, and long-term care benefit structures change often, sometimes monthly. Confirm current figures in the latest carrier disclosure and the contract before you buy. This is general education, not a personal recommendation or an offer of any product. Hans Goldstein is an independent licensed insurance producer (CA license 4273294, NPN 20602398) appointed with several A-rated carriers. His appointment with the carrier reviewed here may vary, and this review is not an endorsement. No carrier paid for this review. Always read the actual contract and consult a licensed advisor before purchasing any annuity or long-term care insurance product. Past index performance does not predict future credited interest. Annuities and hybrid life+LTC policies are long-term contracts with surrender charges; they are not suitable for funds you may need before the end of the surrender period. AM Best ratings and tax treatment are subject to change. Tax discussion of IRC §7702B, §1035, and the Pension Protection Act of 2006 reflects law as of 2026 and is subject to change.