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Lev, Tax Advisor
Category: Tax
Satisfied Customers: 28081
Experience:  Taxes, Immigration, Labor Relations
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I am age 74. I satisfied the terminal illness requirements

Customer Question

I am age 74. I satisfied the terminal illness requirements of the annuity company to fully surrender my IRA annuity and receive a lump sum payment. I did this in 2015. Are there tax consequences considering I satisfied the terminal illness requirements.
Submitted: 6 months ago.
Category: Tax
Expert:  Lev replied 6 months ago.
That is an annuity purchased inside IRA account - correct?So distribution from the annuity would not be taxable .But funds from the annuity will go into IRA account and after that distributed to you.IRA distribution is taxable.You must have reporting form 1099R box 1 reports total distribution 'and box 2a - taxable amount.Please verify.
Customer: replied 6 months ago.
I understand these requirements based upon normal circumstances. I surrendered my IRA because of terminal illness. Does this change anything?
Customer: replied 6 months ago.
Lets conduct business by email. Please answer my last question regarding tax consequences when the lump sum was provided based upon satisfying terminal illness of the annuity company
Customer: replied 6 months ago.
If I don't see something from you in the next 2 minutes, I will cancel my membership.
Expert:  Lev replied 6 months ago.
That is not correct interpretation...
Expert:  Lev replied 6 months ago.
You did not surrender the IRA account.What you did surrender - is the annuity.But for IRA distribution that makes no difference.Were you able to verify what amount is reported on 1099R box 2a?I bet - you see taxable amount there - so the administrator of your IRA account determined that distribution as taxable.Sorry if you expected differently.

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