Annuitization rollover
Here’s the million-dollar question
I have a client who wants to do a ten-year annuitization. The client wishes to have the money sent directly to another insurance company annuity to annuity.
The company that holds the funds now is refusing to code this as a partial 1035 exchange.. They insist on setting the client a 1099.. But they will send a check directly to another company.
the receiving company will issue a letter indicating that they took direct receipt
but they will not issue a 5498
the question is.. Is there a taxable event here?
Permalink Submitted by Alan Spross on Wed, 2012-04-18 19:00
Is this an IRA annuity or a non qualified annuity?
A 5498 only applies to an IRA, and a 1035 exchange does NOT apply to an IRA………..
Permalink Submitted by Robert Corbin on Tue, 2012-05-01 18:17
Is it a taxable event when NQ monies go direct from one company to another…. Annuity to Annuity, but sending company will not code transaction as 1035 because client annuitized contract, and they do not consider annuitized money as 1035??
Permalink Submitted by Alan Spross on Tue, 2012-05-01 21:01
I think the answer may lie within IRS Revenue Procedure in the attached link. Note that the rules were liberalized 6 months ago. The insurance issuing insuror may not be aware of the new rules:
http://www.irs.gov/pub/irs-drop/rp-11-38.pdf