Understanding your annual tax forms and requirements can be complicated. Below are some resources that may answer some of your questions.

The following information is not exhaustive, is not intended as tax advice, and does not address state or local tax consequences. You should consult a qualified tax professional with regard to your specific circumstances.

General

What is the difference between qualified and nonqualified contracts?

What is a direct rollover?

What is an indirect rollover?

If I participate in a retirement plan at work, such as a 401(k), 403(b), SIMPLE IRA, pension plan or profit sharing plan, can I still contribute to my own IRA?

What are the IRA contribution limits for 2013?

Will I receive a tax form for an IRA-to-IRA transfer?

What is a 1035 exchange?

Will I receive a tax form for a 1035 exchange?

What is the tax cost basis of my annuity contract?

Where can I find my contract's tax cost basis?

What should I do if my tax cost basis is wrong?

What is a required minimum distribution (RMD)?

Can I access my RMD online?

Is it true that the estate tax laws have been changed for 2013?


1099-R Forms

What is a 1099-R?

When is a 1099-R issued?

When is a 1099-R not required?

How can I tell if I should receive a 1099-R form?

When will I receive my 1099-R tax form?

Can I access my 1099-R form online?

My qualified account has an outside custodian. Who issues my 1099-R?

Will I receive a tax form for a 1035 exchange?

Will I receive a tax form for an IRA-to-IRA transfer?


5498 Forms

What is a 5498?

Who receives a 5498?

When is a 5498 issued?

Why did I not receive a 5498?

Can I access my 5498 form online?

 

General

What is the difference between qualified and nonqualified contracts?
  • Qualified annuity contracts are intended for use with tax-qualified retirement plans. They are generally funded with pre-tax dollars. Withdrawals from these contracts will often trigger a tax-reportable event.
  • Nonqualified annuity contracts are funded with after-tax dollars. Withdrawals from these contracts will usually trigger a tax-reportable event if the contract value exceeds the tax cost basis.
  • You should consult a qualified tax professional if you have further questions about the tax treatment of your annuity contract.

What is a direct rollover?

A direct rollover is the movement of plan funds from one tax-qualified retirement plan directly to another without passing through the taxpayer’s hands.
  • Direct rollovers are not taxable
  • Direct rollovers ARE reportable
  • No mandatory withholding

What is an indirect rollover?
An indirect rollover occurs when funds from a tax-qualified retirement plan are distributed to the taxpayer and the taxpayer subsequently deposits the funds to another tax-qualified retirement plan.
  • An indirect rollover is not taxable
  • An indirect rollover is reportable
  • A taxpayer has only 60 days to complete the rollover. If the taxpayer does not complete the rollover within 60 days, the entire distribution will be taxable.
  • Indirect rollovers from certain employer-sponsored retirement plans, such as 401(k)s, are subject to mandatory 20% withholding, meaning that the taxpayer actually receives only 80% of the distribution.
The taxpayer must deposit an amount equal to 100% of the distribution from the original plan into the new plan; otherwise, the shortfall will be taxable. For example, if the amount deposited in the new plan equals 80% of the total distribution, the other 20% will be taxable. Accordingly, when tax is withheld from a distribution, the taxpayer must use other funds to make up any shortfall in order to rollover 100% of the funds.

If you have further questions regarding the tax implications of or process for indirect rollovers, please consult your tax professional or financial advisor.

If I participate in a retirement plan at work, such as a 401(k), 403(b), SIMPLE IRA, pension plan or profit sharing plan, can I still contribute to my own IRA?

According to federal tax law, anyone with earned income can contribute to an IRA, although there are limits on who can take a tax deduction for an IRA contribution. However, John Hancock policy restricts additional payments into certain annuity contracts. To find out if you are eligible to make an additional payment into your John Hancock annuity contract, please call our Customer Service line at 1-800-344-1029. Client Services Representatives are available Monday through Friday, 8AM-5PM Eastern Time.

What are the IRA contribution limits for 2013?

Contribution limits for 2013 are:
  • An individual under age 50 at the end of 2013 may contribute 100% of earned income up to $5,500.
  • An individual over age 50 at the end of 2013 may contribute an additional $1,000 or a total of $6,500.

Will I receive a tax form for an IRA-to-IRA transfer?

A trustee-to-trustee transfer of a traditional IRA is generally not reported on a 1099-R.

What is a 1035 exchange?

A 1035 exchange is an exchange of all or part of an existing nonqualified annuity contract for another nonqualified annuity contract. In a 1035 exchange, the funds must be paid directly from one insurance company to another. A 1035 exchange allows the taxpayer to defer income tax when replacing all or part of their current nonqualified annuity contract with another nonqualified annuity contract. If any funds are paid to the taxpayer, all or part of those funds may be taxed as income, depending on the gains in the original contract. The tax rules for 1035 exchanges are complex, so please consult your tax professional or financial advisor if you are interested in completing a 1035 exchange.

Will I receive a tax form for a 1035 exchange?

You will receive a 1099-R if you complete a 1035 exchange to another insurance company. However, a 1035 exchange is not a taxable event. All such 1035 exchanges are reportable and the distribution code of '6' on the tax form indicates to the IRS it was a tax-free 1035 exchange.

What is the tax cost basis of my annuity contract?

The tax cost basis of your annuity is the amount categorized as the after-tax dollars in the contract. For annuity contracts issued after August 14, 1982, withdrawals are taken from earnings first and then tax cost basis. Withdrawals from tax cost basis are not reported as taxable on a 1099-R form.

Where can I find my contract's tax cost basis?

You can find your contract's tax cost basis by logging in to your account online. Look under the Financial Summary section of the contract details page.

What should I do if my tax cost basis is wrong?

If your contract was funded through a 1035 exchange, the tax cost basis on file was reported to us from your previous annuity company. Contact Customer Service at 800-344-1029.

What is a required minimum distribution (RMD)?

An RMD (required minimum distribution) is a minimum distribution that, under federal tax law, must be taken from all qualified plans, including IRAs other than Roth IRAs. IRA owners must begin taking Required Minimum Distributions no later than April 1 of the calendar year following the year in which they reach age 70½. For other qualified plans, the beginning date is generally the April 1 of the calendar year following either the year in which they reach age 70½ or the calendar year in which the taxpayer retires, whichever is later. The RMD must be taken by December 31 of every subsequent year. Generally, a minimum distribution can be satisfied in two ways: annuity payouts or annual withdrawals.

Can I view my RMD online?

Yes, if applicable, the RMD amount calculated by John Hancock for your annuity account can be found on the Client Contract Details page.
  • Log into your account and choose My Contracts from the left rail
  • This will bring you to the Contract Details Page
  • Scroll down to the Contract Specifications section
  • The RMD value will show in the RMD Section, if applicable
If you have further questions about your RMD requirements or if you own more than one IRA, please consult a tax professional.

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Is it true that the estate taxes have been changed for 2013?

Yes. The American Taxpayer Relief Act of 2012 contained a number of changes for 2013, including the following:
  • Raised the basic federal estate tax exemption amount to $5,250,000
  • Raised the maximum estate tax rate from 35% to 40%
  • Increased the annual gift tax exclusion amount to $14,000
The American Taxpayer Relief Act of 2012 maintained some key features from the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010, most notably the portability feature. Before portability, when a spouse passed away the deceased either had to have already used his or her exemption or would lose it upon his or her death. This caused many estate planning attorneys to create credit shelter trusts. Credit shelter trusts are used to preserve the estate tax exemption of the deceased through holding the assets in trust for the benefit of the children. Under the new law in 2013, if one spouse passes away, any unused estate tax exemption will flow to the surviving spouse. Therefore the surviving spouse may be able to exempt as much as $10.5 million from the estate, which means that only a very small number of estates would be subject to tax under this law.

These changes do not eliminate the need for an experienced estate planning attorney. Clients will still need to work with an estate planning attorney to set up important documents such as medical directives and durable powers of attorney.

Trusts are also still useful tools to address special concerns such as:
  • Creditor protection for the beneficiaries
  • Care of disabled beneficiaries
  • Spendthrift beneficiaries
  • Providing for children from previous marriages in a secure way
Finally, like all laws, these rules are subject to change with further legislation, so individuals will still need to work closely with estate planning attorneys to keep their plans up-to-date with the changing tax environment.
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1099-R Form

What is a 1099-R?

A 1099-R is a tax form used for reporting distributions from both qualified and nonqualified annuity contracts. It will report gross distributions, taxable amount, and federal income tax withheld for all the distributions that took place in the previous calendar year. Gross distributions will include partial and full withdrawals and 1035 exchanges and rollovers.

When is a 1099-R issued?

This form is issued when any reportable distribution is taken from a contract. A 1099-R may also be issued for certain taxable transfers of ownership. No 1099-R is issued for a non-taxable transfer of contract ownership to a spouse or to a former spouse incident to a divorce. However, please note that a distribution from an annuity contract will be reported as income to the contract owner, even if the distribution is paid to the owner’s spouse or former spouse as part of a divorce settlement. If you would like to transfer the ownership of your annuity contract, please consult a tax professional regarding the tax implications of your specific circumstances.

When is a 1099-R not required?

A 1099-R is not required if there were no distributions from the contract during the previous tax year, or if only principal (tax cost basis) was withdrawn from the contract in the previous tax year.

How can I tell if I should receive a 1099-R form?

A qualified tax professional will be able to tell you which, if any, of your withdrawals in the previous tax year should be reported on a 1099-R form. Your withdrawal information is available on the Contract Details page:
  • Log into your account and choose My Contracts from the left rail
  • This will bring you to the Contract Details Page
  • Scroll down to the Contract Specifications section
  • Your withdrawals will show in the Contract Transaction History section.
  • You can change both the transaction type and the date range of the transactions shown in the Contract Transaction History section; for example, you can view all withdrawals between 01/01/2012 and 12/31/2012.

When will I receive my 1099-R tax form?

The IRS deadline to distribute the 1099-R tax forms is January 31. We issue the forms throughout the last week of January. Residents of the United States should expect to receive their 1099-R tax form(s) by February 10.

Can I access my 1099-R form online?

The forms are not available online. For mailing dates, view When will I receive my 1099-R tax form? or reference the date chart in the Tax Center.

If you didn't receive a 1099-R form during the distribution period, please contact our Customer Service Center at 800-344-1029 or submit an email by visiting Contact Us to request a copy via regular mail.

My qualified annuity contract 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.

Will I receive a tax form for a 1035 exchange?

You will receive a 1099-R to report a 1035 exchange to another insurance company. However, a 1035 exchange is not a taxable event. All 1035 exchanges are reportable and the distribution code of '6' on the tax form indicates to the IRS it was a tax-free 1035 exchange.

Will I receive a tax form for an IRA-to-IRA transfer?

A trustee-to-trustee transfer from one traditional IRA to another is generally not reported on a 1099-R.
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5498 Form

What is a 5498 form?

Form 5498 shows the contributions and/or rollover amounts paid into a traditional IRA, Roth IRA, SEP IRA or Simple IRA throughout the year. The 5498 also reports the year-end value of the contract. The IRS also receives a copy. The form is for informational purposes only and it is not needed to file your tax return.

Who receives a 5498?

The form is issued to the contract owner for the following qualified plans: Traditional IRAs, Roth IRAs, SEP IRAs, and Simple IRAs. It is not issued for qualified plans such as 403(b) plans, pension plans, and 401(k) plans. A Form 5498 is not issued for nonqualified contracts.

When is a 5498 issued?

The IRS allows contributions to certain qualified plans to be applied towards a previous tax year until April 15 of the following year. Accordingly, the IRS deadline to issue the Form 5498 is May 31.

Why did I not receive a 5498?

You will not receive a 5498 tax form if you did not make any contributions to your IRA for the tax year, if you do not have an IRA or if we have an incorrect mailing address on file for your annuity contract.

Can I access my 5498 form online?

The forms are not available online. For mailing dates, view When is a 5498 issued? or reference the date chart in the Tax Center.

If you should have received a 5498 form during the distribution period, but did not, please contact our Customer Service Center at 800-344-1029 or submit an email by visiting Contact Us to request a copy via regular mail.
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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.

This material does not constitute tax, legal or accounting advice and neither John Hancock nor any of its agents, employees or registered representatives are in the business of offering such advice. It was not intended or written for use and cannot be used by any taxpayer for the purpose of avoiding any IRS penalty. It was written to support the marketing of the transactions or topics it addresses. Comments on taxation are based on John Hancock’s understanding of current tax law, which is subject to change. Anyone interested in these transactions or topics should seek advice based on his or her particular circumstances from independent professional advisors.

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Annuities are issued and administered by John Hancock Life Insurance Company (U.S.A.), Boston, MA, 02116 which is not licensed in New York. John Hancock Distributors LLC, member FINRA, is the principal underwriter and an affiliate of the insurance companies.