How to Calculate Withdrawals From Annuities

Annuities are insurance policies designed to give you a guaranteed income when you retire. Calculating withdrawals from annuities is only done with one particular kind of annuity: the deferred annuity. Deferred annuity withdrawals are calculated based on your income needs. The resulting withdrawal amount may be based on the interest generated from the policy or some other dollar amount. Regardless, the withdrawal you make might be subject to required minimum distributions by the IRS if the annuity is in an individual retirement arrangement (IRA).

Add up all of your expenses in retirement. The resulting figure will be the total amount of income you must generate through withdrawals.

Add up your total annuity account balance and calculate the total amount of money you must withdraw as a percentage of your total annuity account balance. For example, if your expenses are $20,000 per year, and you have $500,000 in your annuity, then you'll be withdrawing 4 percent of the total annuity account each year (($20,000/$500,000)*100 = 4).

Calculate your required minimum distribution (RMD). The IRS requires that you withdraw a minimum amount of money from your annuity-based retirement account once you reach age 70 1/2. This minimum amount is calculated using the RMD tables in Table III in the appendix of IRS publication 590. Add up your total annuity account balance. Then, divide the total by the life expectancy associated with your age in Table III.


  • The annuity-based retirement calculation is only done for IRAs or other retirement plans that contain annuities or 403b tax-sheltered annuity accounts.