Annuities

[Unregistered]

Can Annuities be rolled over to an IRA? and if so where are the surrender fees reported?
Client wants to get out of the Annuities. Took $s out of a Roth to fund the Annuities and now would like to put it back in to another Roth. Is this Legal?

Thanks for any help.

Steve

[S T]

We need Sea Tax

I know that an annuity can be "1035 exchanged", usually a life insurance to an annuity. Or Rollovers = IRA to IRA or 401K Rollover to IRA, etc.

So unclear about the transfer from Roth to Annuity. did your client cash in the Roth and transfer the funds to an Annuity that was "labeled" a Roth rollover?? or simply cash in the Roth, pay any taxes that might be due and then invest in a "non qualified" Annuity???

More details on the entire transaction would help to provide you with a better answer.

Sandy

[sea-tax]

Can Annuities be rolled over to an IRA? and if so where are the surrender fees reported?
Client wants to get out of the Annuities. Took $s out of a Roth to fund the Annuities and now would like to put it back in to another Roth. Is this Legal?

Thanks for any help.

Steve

Not in the office today so I am just going from memory .

This might be a little confusing but here goes. Annuities are an investment vehicle so is an IRA . Therefore yes an Annuity as long as it is an IRA already can be rolled out of an Annuity and into another IRA that say is funded with mutual finds..

If however the Annuity was funded with non-qualified money (and it sounds like yours was) Then the 4000 and 4500 limits for anual funding apply.
So outside of contributing the federal limit per year into a roth your client can't do a rollover.
As for the Surrender Charges and I really am taking a stab at it without my books around.
I would say they are non deductible.

On a investment note I would talk to your client seriously about whether he/she should get out and pay the surrender fees. They can devistate the portfolio. maybe the client can reallocate within the annuity and get a better return until the surrender period is up. This is of course if it is a variable annuity.