Distribution of an ancient MassMutual annuity from a Pension Plan.

[Lori H]

A participant in a MPP Plan had a MassMutual annuity contract from the 80's as an asset in a Pension Plan. This year he thought it was rolled over into an IRA at Wells Fargo.  We only receive a letter from MM stating the value of the annuity at the date it was to be assigned to his IRA earlier this year.  The account doesn't appear to be fbo of the participants IRA and he is afraid that it will be a taxable event.  Last week a 3 paragraph letter was issued from MM Tax Dept stating that "the contract is an individual owner former pension trust contract. It is considered qualified since the nontransferable endorsement was not cancelled upon transfer of ownership to the annuitant. The market type on this contract can be changed to an IRA using from number FR1212."  

By all accounts it does appear that this IS a taxable event since it is not in an IRA and if the 60 day rollover period has elapsed, then how can it be placed into an IRA by way of FR1212? 

 

[Belgarath]

Oh, I thought I had forever banished some of this from my so-called mind. However, an annuity contract that is nontransferable may be distributed with no current taxation. Payments subsequently received from the contract will be subject to tax.

I think the citation is 1.402(a)-1(a)(2). This will also refer you to other sections. I don't recall all the permutations, but it sounds like MM is correct.

[Lori H]

Hmm, this is way before my time.  So no 1099 either? If a 1099-r is required, then would that be a code G for Rollover or code 1 for normal distribution over age 59.5?

Thanks for the response. Impressive recollection.

[Belgarath]

It has been many years since I worked for an insurance company, but the distribution is reported on a 1099, it isn't a taxable distribution. It goes in a separate box - perhaps box 8, but you should look at the 1099 instructions to confirm what needs t be done.