topic If the cash value payout exceeds your contributions (what... in Retirement tax questions

We got a cash surrender for an old insurance policy but no 1099R. Is this taxable? And if so how do I enter it?

amgrady-clauss — Thu, 06 Jun 2019 05:18:50 GMT

If the cash value payout exceeds your contributions (what...

MargaretL — Thu, 06 Jun 2019 05:18:51 GMT

If the cash value payout exceeds your contributions (what you paid in) the excess would be considered taxable and should be reported. At this point, the insurance company would issue a 1099R form. I recommend that you call the policy holder and just double check if there's gain and 1099-R is issued.

If you have no gain on the payout, you don't have to report it.

If you have a loss, they are not allowed, so nothing to report, either.

Re: If the cash value payout exceeds your contributions (what...

mjmckee081 — Sat, 01 Feb 2020 21:02:53 GMT

I have same circumstance, having cashed in an old whole-life policy with a gain, but insurance company says in a letter that (1)" because the surrender value of the original policy is less than $5000 and" (2) " the policy was issued prior to August 13, 1982," the IRS does not require the company to report the gain. The letter does not provide a cite to tax authority and so far the company has not done so on request. I can't find it either so it must be pretty obscure unless you're an insurance company or insurance tax geek.... Any idea for a citation?

Re: We got a cash surrender for an old insurance policy but no 1099R. Is this taxable? And if so how do I enter it?

mpanzer89 — Sat, 16 May 2020 00:23:40 GMT

Sounds like the insurer doesnt have a reporting requirement to you and the IRS. That doesnt obsolve you from tax liability on the gain though.

Re: We got a cash surrender for an old insurance policy but no 1099R. Is this taxable? And if so how do I enter it?

mjmckee081 — Thu, 21 May 2020 15:27:13 GMT

Dear Mpanzer89 (and others) The IRS requires the taxpayer to explain the absence of a 1099R on Form 4852. So my question was intended to find out whether anyone knew why the insurer was not required to provide a 1099R, not whether any gain was taxable. The insurer eventually provided a citation to an example in a temporary reg, apparently still in force: Treas. Reg, 35.3405-1T, F-24. Read it and enjoy. Pretty Obscure (unless you are an insurance company).