1099 R and 1035 exchange on non-qualified annuity

Forum|Forum|1 year ago
March 7, 2025
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I withdrew the full amount of an annuity issued by Insurance Company X. This annuity was issued by X through a 1035 Exchange of an annuity originally issued by Insurance Company Y. The Form 1099 R I received from the Insurance Company X reports on Section 2a - taxable amount - only the interest accrued on its annuity: basically it does not include the interest accrued on the original annuity that was 1035 exchanged.

The Insurance Premium indicated on Section 5 consists of the original premium paid to Y plus all the accrued interest; the distribution code showed on section 7 is D7.

Is this an error made by Insurance Company X, or is there an additional 1099 R that I am supposed to eventually received separately?

Best answer by dmertz

When the annuity was 1035-exchanged from company Y, company Y should have informed company X of the amount of your investment in the contract, and that's the amount that should be present in box 5. Box 5 should not include any amount of investment gain that was transferred in the exchange. Box 2a should show all of the investment gains, not just the gains while at company X, and should be the difference between the amount in box 1 and the amount in box 5.

If company X refuses to correct the Form 1099-R, you'll need to submit a corrected Form 1099-R (Form 4852) showing the correct amounts. Entering a substitute Form 1099-R prevents you from e-filing.

dmertzAnswer

Employee

If company X refuses to correct the Form 1099-R, you'll need to submit a corrected Form 1099-R (Form 4852) showing the correct amounts. Entering a substitute Form 1099-R prevents you from e-filing.