[GNC] When income is not income

[R Losey]

On Thu, Jul 3, 2025 at 1:17 PM Stan Brown (using GC 4.14) <
stan+gc at fastmail.fm> 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.


-- 
_________________________________
Richard Losey
rlosey at gmail.com
Micah 6:8