Why did I receive a Form 1099-R when I transferred by annuity directly to another annuity (or from life insurance to life insurance) as a nontaxable 1035 exchange?
The IRS requires us to report a 1035 exchange between companies even though it is not taxable. Your Form 1099-R should show 0.00 (zero) in line 2 (taxable amount) and distribution code “6” in line 7. Line 5 includes “insurance premiums”, which is the investment in the contract information provided to the receiving company. However, if you received any value at the time of the exchange, such as a loan cancelation or a check sent to you, the amount you received is taxable up to the earnings in the account. Any taxable distribution or deemed distribution is reported on a separate Form 1099-R.
Related Questions
- Form 1099-B, Proceeds from Broker and Barter Exchange Transactions will be mailed to shareholders who have sold any of their fund shares during the year. (See the answer to the question: Why did I receive Form 1099-B, and where do I report the information?
- Does the income from the annuity contract differ significantly from the income producing asset that was transferred?
- Are Universal Life Insurance policies considered "foreign trusts" for reporting purposes on Form 3520?
