Advanced Underwriting Consultants

Question of the Day – May 31

Ask the Experts!

The professionals at Advanced Underwriting Consultants (AUC) answer the tax and technical questions posed by producers.  Here’s the question of the day.

Question: My 60 year old client is interested in annuitizing his IRA over a 15 year period certain.  Will the annuity payments be eligible for rollover?

Answer: No.

In order to be eligible for rollover, any distribution from a retirement plan, including an IRA, must meet the definition of eligible rollover distribution.  Here’s an excerpt from Code Section 402:

Eligible rollover distribution
For purposes of this subsection, the term ''eligible rollover distribution'' means any distribution to an employee of all or  any portion of the balance to the credit of the employee in a  qualified trust; except that such term shall not include –
(A) any distribution which is one of a series of  substantially equal periodic payments (not less frequently than  annually) made….
            (ii) for a specified period of 10 years or more,

If the period certain annuity is for less than ten years, payments may generally be rolled over—unless they are part of the taxpayers required minimum distribution.

Have a question for the professionals at AUC?  Feel welcome to submit it by email.  We may post your question and the answer as the question of the day.