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Anne, Master Tax Preparer
Category: Tax
Satisfied Customers: 2429
Experience:  Enrolled Agent with 25 Years Experience specializing Individual and Small Businesses
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A client of mine has investments. During the tax year, some

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A client of mine has investments. During the tax year, some of these investments were transferred from one AXA Equitable Life ins account to Wachovia Sec. The money never touched her hand it was an paper transfer. AXA has sent her 1099R's with 7 dist code saying all of this is taxable. How do I go about preparing her return, as she did not receive this money. These are not IRAS, from all knowledge I have, they are annuities. Help!



Thank you for using justanswer. Although its unfortunate that AXA reported this as a distribution, its really a fairly common occurence, and easily dealt with. When you fill out the tax return, you only need to show the $ amount shown in box 1 of the 2008 Form 1099-R (Gross Distribution) on line 16A (Pensions and Annuities) of theForm 1040 in Adobe PDF Format. Line 16b of the Federal 1040 form should have a 0 on it, with the word "rollover" written on the line 16. (Some tax software will write that in for you automatically based on the answers to the questions they ask, and some won't. If your software doesn't do that, just write it on by hand.) . You should then keep the paperwork showing where the money was rolled to with the tax return, in case the IRS ever asks to see them.


By law your client would have 60 days to roll over 1 annuity to another one, and the institution that held the original annuity would not have necessarily known the money was rolled over, so they would have correctly reported a distribution of the whole annuity. (I understand that wasn't the way this was supposed to be reported ) I bring this up so that you can see that just because there is an amount in box 2 of the 1099R showing a taxable distribution, IRS knows that there could have been a rollover within 60 days. They just need to see it on the tax return, and following the steps above will show them that.


I hope this helps you.


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Anne, Master Tax Preparer
Category: Tax
Satisfied Customers: 2429
Experience: Enrolled Agent with 25 Years Experience specializing Individual and Small Businesses
Anne and other Tax Specialists are ready to help you

If the funds moved from one nonqualified annuity contract to another annuity contract then that was a Section 1035 exchange not a rollover. The client should attach a statement to the return explaining the transaction and that it was a 1035 exchange. If it is reported as a rollover then the IRS may be looking for a Form 5498 (which an IRA trustee issues when a rollover is received).


See page R-2 regarding Section 1035 exchanges -


See page 18 -


Hi againCustomer/p>


Bill has a point. I took your question at face value when you said they were both annuities, but if there's any question about whether or not the life insurance annuity is qualified or non qualified, you will want to find out so that you handle the tax situation correctly.


Since our goal here is to give you our best, XXXXX XXXXX information in helping you find an answer to a particular question, I thank Bill for his input on this.



Customer: replied 8 years ago.
accepted first answer. thank you