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Bob1947
New Member

If I surrender a non qualified annuity does the original investment appear on a 1099 R? Is it non-taxable and will it show as part of the AGI for the year?

Also does that amount effect the Medicare premiums in any way ?
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6 Replies

If I surrender a non qualified annuity does the original investment appear on a 1099 R? Is it non-taxable and will it show as part of the AGI for the year?

When money from a non-qualified annuity is withdrawn there are no taxes due on the principal portion of the distribution. Income taxes are levied only on the earnings and interest. The IRS determines which portions of a non-qualified annuity withdrawal are taxable by using a calculation known as the exclusion ratio.

 

So the taxable portion will increase your AGI and can affect your income for the medicare surcharge. 

dmertz
Level 15

If I surrender a non qualified annuity does the original investment appear on a 1099 R? Is it non-taxable and will it show as part of the AGI for the year?

The exclusion ratio only needs to be calculated for periodic distributions.  For a surrender of a non-qualified annuity, a nonperiodic distribution of the entire annuity, the taxable amount is simply the gross distribution amount minus the amount of the distribution that represents investment in the contract.  If the payer knows the amount that is investment in the contract, which they should know unless they've somehow lost the investment and distribution history, they will show in box 5 of the Form 1099-R the amount that represents investment in the contract and will show in box 2a the remainder of the distribution, the taxable amount.

Gayle411
New Member

If I surrender a non qualified annuity does the original investment appear on a 1099 R? Is it non-taxable and will it show as part of the AGI for the year?

I purchased my annuity with post tax money. It has matured. My 1099 R has both box 5 and 2 with correct amounts. Turbo Tax is showing my original investment amount as non taxable income for 2019. How do I prevent this as it is incorrect and will impact my medicare premiums?

DavidD66
Employee Tax Expert

If I surrender a non qualified annuity does the original investment appear on a 1099 R? Is it non-taxable and will it show as part of the AGI for the year?

You said TurboTax is showing your original investment as non-taxable, and that's a problem - is that correct?  It sounds like your annuity was reported correctly and only the amount in excess of your original investment will be taxable.

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If I surrender a non qualified annuity does the original investment appear on a 1099 R? Is it non-taxable and will it show as part of the AGI for the year?

In 2023 I made a withdrawal from my non-qualified annuity. What form do I use to show the non-taxable portion and reduce it from my AGI?

AmyC
Employee Tax Expert

If I surrender a non qualified annuity does the original investment appear on a 1099 R? Is it non-taxable and will it show as part of the AGI for the year?

You should have been issued a 1099-R with box 5 showing your contributions. This reduces the taxable income from box 1 so that only the taxable portion shows in box 2.

@Gjccolclough 

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