taxation of pre 1986 insurance distributions?
I believe the year was 1986. today money coming out of an annuity or life insurance policy is LIFO – and taxed an income until basis.
Policies issued prior to 1986? are allowed FIFO treatment is that correct? or was there some other tax benefit to these older policies?
thanks
Permalink Submitted by Al Fry on Fri, 2007-11-09 23:39
All these various tax law dates can be confusing.
Annuities: Distributions from annuities issued after August 13, 1982 or amounts attibutable to contributions made after that date are LIFO. Amounts attributable to contributions made prior to August 14, 1882 are FIFO.
Life Insurance: Distributions from contracts issued prior to January 1, 1985 are FIFO, unless there has been a material change to the contract. Distributions from contracts issued after December 31, 1984 MIGHT be FIFO and MIGHT be LIFO, depending on a “Recapture Ceiling” formula.