I purchased an insurance annuity contract using funds from a 401k. The rollover was direct and I did receive a 1099-R reflecting that rollover. The 1099 accurately indicates that the "income" is non-taxable. However, I do not understand why the amount is added to AGI. The reason I ask is that puts me in the window where my IRA contribution deduction is limited and retirement investment credit is eliminated. Is that correct? It wasn't really income since it was completely rolled over, so I don't understand why that is still counted as income within AGI. Thanks, in advance, for explaining!
