Annuity in an IRA and One That's Not.

Mar 01, 2013 2 Replies
J

Last Year my wife purchased an annuity with some of the funds in her regular IRA. It is a "life insured" annuity which will pay her estate its full purchase price as a minimum upon her death, and possibly more than that if the invested assets increased.



The annuity paid her directly a fixed amount per month in 2012.



I'm assuming this income is reportable, but where does it get placed, under "other income" maybe.



I also bought the same type of annuity, but it's held in a regular brokerage account. How do I report the similar monthly income I received from that annuity during 2012?



Thanks Fellas,



Jeff


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P

"jeff_wisnia" wrote

This whole set-up doesn't sound right to me.

It looks and smells like an IRA distribution, either when the premiums paid the life/annuity policy (which if allowed would be owned by and pay benefits to the IRA then disbursed to the IRA beneficiaries), or when the policy made periodic payments to her if indeed the policy was owned by the IRA.

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A

One can purchase an annuity inside an IRA. This doesn't change the account to something else. It is still an IRA. Any distribution gets reported on Line 15 of the 1040 (IRA Distribution). The owner should receive a 1099-R from the IRA trustee and Box 7 should have the IRA designation checked.

You will also receive a 1099-R from the insurance company. You will report it on Line 16 of the 1040, Pensions and Annuities.

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