Roth IRA

[Guest ScottG1206]

I work for an insurance company the deals with annuities. We have questions from our clients asking if we use the surrender value or accumulation value when doing a Roth Conversion. We have surrerender chares and Market Value adjustments when doing a surrender. Any help on this matter would be appreciated. We have been told to always use accumulation value as of the day the client wants to covert. Example client has an IRA annuity with us. Client sends in request to covert to a Roth. We would look at the accumulation value as of the date of the letter and use that value for reporting and taxing.

[JAMES PATRICK]

I am not very familiar with insurance and annuiities but my take is that the "accumulation" value is what we would call the fair market value on that date. That would appear to be the value to report rather than that value less surrender charges. When stock is transferred from an IRA to a Roth it is the FMV that day, NOT the FMV less potential brokerage sales commissions.