Direct Rollover from 401k to Qualified Annuity

Forum|Forum|3 years ago
March 31, 2023
1 reply
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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!

AmyC

Level 15

I am assuming you are saying that the distribution is showing on line 5b as taxable. A rollover will not affect your IRA contribution allowed. Something is not entered correctly.

The 1099-R should show rollover code G in box 7. Box 2a taxable amount should be zero. I can only think you didn't go through all the questions after entry and mark that is was rolled over.

Follow these steps: Where do I enter an IRA rollover?

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beeklutchAuthor

Level 2

I did go through all questions, several times actually. As I mentioned, yhe 1099 does show zero taxable, and does show G for direct rollover.

This was a traditional IRA that was moved, in full, to an insurance annuity product. I am not being taxed on that amount, but IT IS added in AGI which results in me losing the retirement investment credit AND losing a portion of my IRA (separate vehicle) contribution for last year.

The software asks whether all or part moved to Roth IRA on order to assess taxes. However, this trad IRA went to insurance annuity (not employer sponsored annuity) and there's no way to clarify tha