Minimum distributions from annuity contracts into a Roth.

[Guest AD]

In 1998 I exercised the option to rollover some TIAA/CREF annuity accumulations into a traditional (or "classic") IRA, then converted those assets to a Roth IRA. In 1999 I took initial minimum distributions from remaining TIAA/CREF annuity contracts and had those funds "credited" to the Roth (as permitted by TIAA/CREF forms). I am retired and do not have earned income. Is this action treated as a conversion (rather than a contribution) and shown on 8606?

[BPickerCPA]

Your message is confusing.

1. Only money that is in an IRA can be moved to a Roth IRA.

2. Required minimum distributions at age 70½ cannot be put into a roth IRA.

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Barry Picker, CPA/PFS, CFP

New York, NY

[Guest AD]

Mr Picker-

In a two-step process, TIAA/CREF withdrew funds from my annuity to set up an IRA, then converted the IRA to a Roth. That's what I did in 1998.

In 1999 I completed TIAA/CREF forms to begin minimum distributions which they said would be credited to my Roth. I assume they can do this because the RMD comes from the annuity, then is set up as an IRA and converted to Roth. I agree that it is confusing; hence my question as to how the "credit" should be shown on 8606.

[BPickerCPA]

The confusing part is this --

IF the annuity is an IRA, then you cannot take the RMD and put it into a Roth. You must take the RMD out of the IRA, and keep it out of the IRA.

IF the annuity is NOT an IRA, then you cannot put it INTO an IRA, unless it's a tax deferred annuity plan under code sec 403(B). If it is, then you still cannot take an RMD and put it into any type of IRA. You must take it and keep it.

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Barry Picker, CPA/PFS, CFP

New York, NY

[Guest AD]

Your second paragraph pertains: According to recent communication from TIAA/CREF, the RMD is coming directly from the annuity and being credited to the Roth. Since I'm ineligible to make contributions, I've requested TIAA/CREF to reverse the action.