transfer from custodian to custodian
i have a spia (single premium immediate annuity) annuity inside a roth ira, with the annuity company that created the annuity as the custodian. (for the sake of completeness i am over 70 1/2, although with a roth i don’t think it’s relevant). the annuity company is balking at my request to recharacterize the roth as a traditional ira, saying that “once any payments have been made no changes are possible.” (some payments have been made). is the annuity company required based on my directive on an appropriate form to transfer the roth ira as a roth to a different custodian (which IS willing to recharacterize as a traditional)? the annuity company has received all the money and i own the annuity. i am within all applicable IRS deadlines.
Permalink Submitted by Alan - IRA critic on Wed, 2017-02-15 21:48
What are you recharacterizing and why? A regular contribution for 2016 or 2017, or a conversion done in 2016 or 2017? Any contributions or conversions older than this cannot be recharacterized because the deadline has passed to do so.Once an annuity has been annuitized, your options are very limited. You would have to ask the insurance company what they are.
Permalink Submitted by jon udell on Thu, 2017-02-16 00:39
to respond to your kind comments, i am trying to recharacterize a 2016 traditional ira which was mistakenly converted to a roth. i understand i have until october 2017 to recharacterize. want desperately to recharacterize because followed accountant advice to convert into roth (bad advice). not following “annuitize” in your post. if insurance co as ira custodian won’t recharacterize, aren’t they required at least to transfer at my request (to a different custodian)?
Permalink Submitted by David Mertz on Thu, 2017-02-16 20:47
The problem is that since distributions have been made from the SPIA while in the Roth IRA, the recharacterization would have to be a partial recharacterization. The question is then, how do you determine the proportion that was distributed, the proportion being recharacterized, and any gain or loss attributable to the portion being recharacterized? It’s hard to imagine how that could be done and I’m pretty sure that the IRS has not provided any guidance on this. You certainly can’t treat this as a full recharacterization. Being able to do so would allow for essentially unlimited tax free distributions from the SPIA without ever having to pay tax on the Roth conversion.