How to best set up single immediate premium joint annuity

MollyG

I bought a SIPA joint contract from NY Life. We'll get a fixed amount of money a month for the rest of our lives, for however long we live, even if one of us dies. However, if we both die, no one gets the residual, if one even exists at that point in time. There is no inflation adjustment rider either. We bought the contract using tax deferred monies. To account for this within Quicken, I simply created another IRA account, named it NY Life and transferred the contract purchase amount to that account. Having had to sleuth for missing monies for my in-laws, we wanted a clear audit trail - the notes field makes it clear that there are no beneficiaries once we are both dead even if this account shows a balance. Our first annuity payment starts in March. Should I simply transfer each payment to our checking account from the NYLife IRA account I set up? Eventually, I will hit a zero balance, or even go negative - G-d willing, many years from now. The distributions should show up correctly as taxable in the tax reports which I think is all that is important from an accounting standpoint. There is nothing to download or track - the value is irrelevant - and I've excluded it from the net worth reports. That said, I'm truly winging it…Is there a better way to do it?

NotACPA

A former employer of mine many years ago converted their Defined Benefit Retirement Plan (i.e., Pension) to a
Defined Contribution Plan (401k).

I did almost what you did and created a non-tax-deferred Asset type account … since the account wouldn't hold securities. The "Tax Schedule" for that account was set as "1099-R: Total Pension Taxable Distribution" so that the monthly transfers to my checking account were recorded as taxable.

On the checking account side, the deposits were split to show the 1st line as the transfer and the 2nd line as the taxes withheld (a negative number)… resulting in the Net amount as a deposit into checking.

When, late last year, the Annuity account was almost exhausted, I recorded the net amount deposited into checking and in the split I recorded the last amount in the annuity account (reducing it to $0), the taxes w/h as a negative and the remainder needed to make the deposit as coming from a new "Annuity category" that I created … so that the Annuity account itself never went negative. The Annuity category has the same tax attribute that the Account had for "transfers out".

Mine did have a death benefit, so it was a bit different than yours … but I think that most of my example applies.