Is an Annuity a "Qualified Plan"

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Subject Author Date Is an Annuity a "Qualified Plan" Gene Bleuler 03-20-2009  Re: Is an Annuity a "Qualified Plan" Gene E. Utterback, EA, RF... 03-20-2009   Re: Is an Annuity a "Qualified Plan" Steve Pope 03-20-2009  Re: Is an Annuity a "Qualified Plan" Gene Bleuler 03-20-2009  Re: Is an Annuity a "Qualified Plan" Paul Thomas, CPA 03-20-2009
Posted by Gene Bleuler on March 20, 2009, 12:25 pm Please log in for more thread options MY MIL who recently died had purchased a Value Plus Fixed Annuity many years ago investing --$15,000. As executor, I liquidated it at its current value-- $70,000 and am looking at being taxed on the $55,000 gain. Since she (the participant) was born prior to 1/2/36 and I took a total distribution of the funds, Form 4972-- Lump-Sum Distribution allows this gain to be taxed at a much lower rate IF the annuity is a "qualified plan" -- whatever that means. I have the 1099-R and called the insurance company that the annuity was purchased from-- but I can't get anyone who speaks understandable English, much less can tell me if the annuity is a qualified plan! So how can I tell? -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Posted by Gene E. Utterback, EA, RFC, AB on March 20, 2009, 12:39 pm Please log in for more thread options > MY MIL who recently died had purchased a Value Plus Fixed Annuity many > years ago investing --$15,000. As executor, I liquidated it at its current > value-- $70,000 and am looking at being taxed on the $55,000 gain. > > Since she (the participant) was born prior to 1/2/36 and I took a total > distribution of the funds, Form 4972-- Lump-Sum Distribution allows this > gain to be taxed at a much lower rate IF the annuity is a "qualified > plan" -- whatever that means. > > I have the 1099-R and called the insurance company that the annuity was > purchased from-- but I can't get anyone who speaks understandable English, > much less can tell me if the annuity is a qualified plan! > > So how can I tell? Based only on what you've said here, it is likely that this NOT a qualified plan. Did she fund this privately? If so, the answer is likely no. Was this funded through a company sponsored retirement plan? If so, the answer is likely yes. Gene E. Utterback, EA, RFC, ABA -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Posted by Steve Pope on March 20, 2009, 7:55 pm Please log in for more thread options >> MY MIL who recently died had purchased a Value Plus Fixed Annuity many >> years ago investing --$15,000. As executor, I liquidated it at its current >> value-- $70,000 and am looking at being taxed on the $55,000 gain. >> >> Since she (the participant) was born prior to 1/2/36 and I took a total >> distribution of the funds, Form 4972-- Lump-Sum Distribution allows this >> gain to be taxed at a much lower rate IF the annuity is a "qualified >> plan" -- whatever that means. >> >> I have the 1099-R and called the insurance company that the annuity was >> purchased from-- but I can't get anyone who speaks understandable English, >> much less can tell me if the annuity is a qualified plan! >> >> So how can I tell? >Based only on what you've said here, it is likely that this NOT a qualified >plan. >Did she fund this privately? If so, the answer is likely no. >Was this funded through a company sponsored retirement plan? If so, the >answer is likely yes. This may not be much of a datapoint, but I have heard that if you buy a plain-vanilla after-tax annuity, outside of any qualified plan, you start to get information returns that look like those from qualified plans. Why this is, I am not sure. Simplest would be if only qualified plans issued 1099-R's but apparently this is not the case. Steve -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Posted by Gene Bleuler on March 20, 2009, 8:00 pm Please log in for more thread options >> MY MIL who recently died had purchased a Value Plus Fixed Annuity many >> years ago investing --$15,000. As executor, I liquidated it at its >> current value-- $70,000 and am looking at being taxed on the $55,000 >> gain. >> >> Since she (the participant) was born prior to 1/2/36 and I took a total >> distribution of the funds, Form 4972-- Lump-Sum Distribution allows this >> gain to be taxed at a much lower rate IF the annuity is a "qualified >> plan" -- whatever that means. >> >> I have the 1099-R and called the insurance company that the annuity was >> purchased from-- but I can't get anyone who speaks understandable >> English, much less can tell me if the annuity is a qualified plan! >> >> So how can I tell? > > Based only on what you've said here, it is likely that this NOT a > qualified plan. > > Did she fund this privately? If so, the answer is likely no. > > Was this funded through a company sponsored retirement plan? If so, the > answer is likely yes. > > Gene E. Utterback, EA, RFC, ABA Thanks, it was privately funded-- so that wasn't the answer I was hoping for.... -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Posted by Paul Thomas, CPA on March 20, 2009, 1:05 pm Please log in for more thread options > MY MIL who recently died had purchased a Value Plus Fixed Annuity many > years ago investing --$15,000. As executor, I liquidated it at its current > value-- $70,000 and am looking at being taxed on the $55,000 gain. > > Since she (the participant) was born prior to 1/2/36 and I took a total > distribution of the funds, Form 4972-- Lump-Sum Distribution allows this > gain to be taxed at a much lower rate IF the annuity is a "qualified > plan" -- whatever that means. > > I have the 1099-R and called the insurance company that the annuity was > purchased from-- but I can't get anyone who speaks understandable English, > much less can tell me if the annuity is a qualified plan! > > So how can I tell? As Gene said, it's probably not a qualified plan. Some clue might be in how the annuity is titled. Often there is an indication of the investment being "qualified" with "IRA", or similar, in the name on the statements. Like "MIL Name SEP-IRA". Anything like that to hint that it's a qualified plan? -- Paul Thomas, CPA Watkinsville, Georgia -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Similar Threads Posted Non-Qualified Variable Annuity June 10, 2006, 4:19 pm Taxability of distributions from a non-qualified annuity January 26, 2007, 5:58 am Deferral Limits - participant in both SIMPLE plan and 403(b) plan December 16, 2006, 8:45 pm Inherited IRA wants to buy an immediate annuity July 22, 2008, 3:53 pm annuity "exchange" October 1, 2008, 3:22 pm Pennsylvania Taxable Annuity? 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