Excess Rollover
A client made a spousal rollover of the proceeds from an annuity in 2008. The annuity company put the proceeds of the death claim in a beneficiary access account, when the client wrote a check from the BAA account to roll it into her IRA she included the interest earned from the date of death until the claim was processed and deposeted in the BAA. (about $500). The IRS has sent her a notice saying she did not roll over her deceased husbands IRA and is asking for more tax. She did roll it within the 60 days.
Should she pull the excess out of her IRA and write an explanation to the IRS or write an explanation and get a penalty on the $500?
Permalink Submitted by Alan Spross on Wed, 2010-09-01 00:03
Was this an IRA annuity or a non qualified annuity? If NQ, it cannot be rolled over to any kind of IRA and the entire contribution is an excess contribution, not just the interest. Perhaps this is what the IRS meant by saying she did not roll over an IRA?
Permalink Submitted by Mark Hilgenberg on Wed, 2010-09-01 00:12
[quote=”[email protected]“]Was this an IRA annuity or a non qualified annuity? If NQ, it cannot be rolled over to any kind of IRA and the entire contribution is an excess contribution, not just the interest. Perhaps this is what the IRS meant by saying she did not roll over an IRA?[/quote]
IRA annuity.
Permalink Submitted by Alan Spross on Wed, 2010-09-01 01:12
OK. I think the BAA was probably titled in beneficiary form and therefore she should be able to roll over the entire amount including interest. Perhaps the problem relates to how this was reported on her tax return. Did she show the distribution and rollover on line 15? Did her IRA report receipt of the rollover contribution on a 5498?
Permalink Submitted by Mark Hilgenberg on Wed, 2010-09-01 16:23
Hi Alan,
The annuity company reported $34,564 on their 1099 and the rollover was made for $35,113, it looks like the interest credited from the time of death until the claim was paid was not included in the 1099. The 5498 from the receiving company show the $35,113.
It was all reported on Line 15.
It looks like the $549 needs to be removed in some way.