The events and transactions outlined in the table below are general annuity tax guidelines. As always, please contact your financial representative or tax professional regarding your specific circumstances.
| Financial Type |
Taxable or
Non-taxable?
|
Reportable or Non-Reportable to IRS? |
| 1035 exchange |
Non-taxable |
Reportable |
| Collateral assignment |
Taxable (to the extent of earnings) |
Reportable |
| Excess contributions |
Tax penalty on excess |
Reportable |
| Indirect rollovers1 |
Non-taxable if completed within 60-days |
Reportable |
| Direct rollovers |
Non-taxable |
Reportable |
| Direct Transfers |
Non-taxable |
Non-Reportable |
Line of business (LOB) changes
403(b) to IRA
403(b) to IRA
SIMPLE IRA to IRA2
SIMPLE 401(k) to IRA
IRA to 403(b) |
Non-taxable
Non-taxable
Non-taxable
Non-taxable
Non-taxable
|
Reportable
Reportable
Reportable
Reportable
Reportable
|
| Loan defaults |
Taxable |
Reportable |
Non-qualified contracts distribution to owner(s)
With earnings
Without earnings
|
Taxable
Non-taxable
|
Reportable
Non-Reportable
|
Ownership change
Individual —› Individual (non-spouses)
Transfer between spouses
Transfer incident to divorce
Collateral assignment |
Taxable (if earnings)
Non-taxable
Taxable (if earnings)
Taxable
|
Reportable
Non-Reportable
Reportable
Reportable
|
| Qualified plans distribution to owner |
Taxable |
Reportable |
| Roth conversion (IRA to Roth IRA) |
Taxable |
Reportable |
| Roth recharacterization (Roth IRA to IRA) |
Non-taxable |
Reportable |
1 They are reportable and taxable if the account owner takes receipt of the money. However, a tax form 5498 would offset the 1099-R reporting. This is especially true for 60-day rollovers.
2 After the expiration of the 2 year period, the IRA owner may rollover money to an IRA that is not a SIMPLE IRA. You can only transfer money to another SIMPLE IRA during the 2 year period.
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.
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