The general principle in determining if there is potential income is to look first at the definition of income in the trust agreement, and if nothing there is on point, then look to the applicable state trust law. NIMCRUTs that invest in commercial annuities are typically drafted with language that defines income to be any amount that is ordinary income for tax purposes, but only upon withdrawal. Since ordinary income is defined by reference to cash surrender value, you would not yet have any potential distributable income if you have this definition in your agreement. If you don't have any trust provision dealing with annuity investments, then you need to look to your state trust law.