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What is a direct rollover?
What is an indirect rollover?
When is a 1099-R issued?
When is a 1099-R not required?
My qualified account has an outside custodian. Who issues my 1099-R?
Who receives a 5498?
What are the IRA contribution limits for 2007 and 2008?
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| What is a direct rollover? |
The movement of qualified plan assets from one retirement plan to another without constructive receipt of assets by the account holder.
- Direct rollovers are not taxable,
- Direct rollovers ARE reportable
- No mandatory withholding
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| What is an indirect rollover? |
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An indirect rollover is the movement of qualified plan assets from one retirement plan to another, where the account holder takes receipt of the assets.
- An indirect rollover is not taxable1
- An indirect rollover is reportable
- An account owner has 60 days to complete the rollover
- Indirect rollovers are subject to mandatory 20% withholding
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| When is a 1099-R issued? |
| This form is issued when any distribution is taken from a contract. A 1099-R is also issued when there is a transfer of ownership. A 1099-R is not issued for a change of Social Security or Tax Identification number resulting from the transfer of ownership to a spouse. |
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| When is a 1099-R not required? |
- There were no distributions from the contract
- Only PRINCIPAL (Tax Cost Basis) was withdrawn from the contract
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| My qualified account has an outside custodian. Who issues my 1099-R? |
| The custodian is responsible for reporting any tax-reporting event and must produce a 1099-R if a distribution is taken. |
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| Who receives a 5498? |
The account holder and IRS (by May 31st) for these types of accounts:
- Traditional IRAs
- SIMPLE IRAs
- Roth IRAs
- SEP IRAs
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| What are the IRA contribution limits for 2007 and 2008? |
- Individual contribution limits are as follows:
- 2007: 100% of earned income up to $4,000.
- 2008: 100% of earned income up to $5,000.
- An individual over the age of 50 is eligible to "catch-up" and can contribute $1,000 more.
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1 If the owner does not deposit 100% of the assets with the new trustee, the distribution will be taxable.
When considering an annuity for use in an IRA or other tax-qualified retirement plan (i.e., 401(k), 403(b), 457), it is important to note that there is no additional tax deferral benefit, since these plans are already afforded tax-deferred status. Thus, an annuity should only be purchased in an IRA or qualified plan if some of the other features of the annuity are of value, such as access to specific portfolio choices, the ability to have guaranteed payments for life and other guaranteed benefits, and you are willing to incur any additional costs associated with the annuity to receive such benefits. See the prospectus for details. |