Rollover from IRA Annuity to Roth Annuity
I recently did a Roth conversion on a $115,000 IRA annuity, which included $100,000 of my own IRA money and a $15,000 bonus from the insurance company. (The taxes on the $115,000 roth conversion were paid from separate funds outside of the annuity.)
I am over 59.5 years old, and I own another qualified Roth IRA account that is over 5 years old.
Two questions:
1. Is the $115,000 Roth annuity considered a “qualified” account?
2. When I start the income rider on the $115,000 Roth annuity, is there any special tax reporting needed on the $15,000 bonus from the insurance company?
Permalink Submitted by Alan - IRA critic on Thu, 2024-07-04 13:35
Once any of your Roth accounts is qualified, all other Roth accounts are also qualified. Therefore your entire balance in Roth IRAs is fully qualified and tax free.
No. You will get a 1099R for the amount of any distribution from either of the Roth IRAs, and that figure must be reported only on line 4a of Form 1040. 4b is the taxable line and that will be blank. Form 8606 is not needed.
The longer you leave the income rider untapped, the more tax free gains will be generated in the Roth IRA.