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1099-R for an annuity?


JButtrick

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A DB plan is terminating and the particpants are being offered either a Lump Sum (which can be paid in cash or rolled over) or an annuity.

If the participant elects a Lump Sum, he gets a 1099-R with either a code 1, 2, 7 or G.

But what if he elects an annuity? My inclination is that he should get a 1099-R with a G, but the I don't see the words "annuity contract" in the code G description.

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Couldn't the plan issue a 1099R using either codes 1,2 or 7, with the critical item being the amount reported as taxable? For example, if a plan purchasing an annuity from an insurance company to pay a participant is considered a non-taxable event, the participant would still be the recipient, zero would be shown as taxable, and the insurance company would then issue a 1099R for any taxable amounts or 1035 exchanges made afterwards, even if they're made in the same year as the initial annuity purchase.

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http://www.irs.gov/pub/irs-pdf/i1099r_11.pdf

Is the explanation under "Box 8" on page 12 relevant?

I'm a retirement actuary. Nothing about my comments is intended or should be construed as investment, tax, legal or accounting advice. Occasionally, but not all the time, it might be reasonable to interpret my comments as actuarial or consulting advice.

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Is the explanation under "Box 8" on page 12 relevant?

I believe the key phrase there is "...part of a lump-sum distribution." But we're talking about a plan-distributed annuity, so no, I don't think it's relevant. (I'm not 100% sure about any of this but am relatively confident, FWIW.)

Ed Snyder

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