IRA misclassified to a NQ Annuity and SPL How do I fix within a 60 day
Client and her semi accountant sold Ira funds from Vanguard and stated that funds were NQ. I double checked and
the funds sold were IRA monies. The client wrote a check to an Annuity Carrier and a Life Carrier. The policies were characterized as NQ. How do I re classify and what IRS Form/s are needed to correct? I appreciate your help!
Permalink Submitted by Jennifer Frias on Wed, 2018-10-31 18:58
thank you
Permalink Submitted by Alan - IRA critic on Wed, 2018-10-31 20:11
What were the dates of the IRA distribution and dates of the annuity and Life Ins purchases? Does client have other money available to complete an IRA rollover or do they need to cash in the those two purchases to fund the rollover?
Permalink Submitted by Jennifer Frias on Wed, 2018-10-31 21:01
Distribution dates 9/30/2018. Policy issue dates 10/05/18. Client just mis stated that monies were NQ.
Permalink Submitted by Alan - IRA critic on Wed, 2018-10-31 23:18
She might be able to explain what happened to the annuity issuer and have the annuity reformed into an IRA annuity contract, but this cannot be done with the life insurance because life insurance is not a permitted IRA investment. She may have to cash in the life policy and also the annuity if the annuity issuer so requires. Of course, if she has other money she can complete the IRA rollover now to eliminate the taxes on the IRA distribution and then either keep the other two contracts or surrender them. Note that since the 60 day rollover relief does not apply to the circumstances here (all her error), she must complete the IRA rollover no later than 11/29 or the IRA distribution will be taxable. Hopefully, at least the annuity issuer or agent will work with her.