Can I convert/rollover an inherited non-qualified annuity to a Roth IRA?

[nathstaxes]

Hi,

If I inherit a non-qualified, deferred annuity - can I roll it over into a Roth IRA?

The reason for doing this would NOT be to avoid paying taxes on any capital gains the annuity has made. 

The reason is so I could contribute the whole amount of the inherited annuity into a Roth IRA in

a single year, rather than having to contribute a max of $6,500 each year over MANY years instead.

Thank you so much,

[tagteam]

@dmertz?

[dmertz · Accepted solution]

No.  Non-qualified annuities are not eligible for rollover or conversion.  Although you might be able to do a 1035 exchange into another non-qualified annuity, that would not change the non-qualified nature of the annuity.

[nathstaxes]

Thank you so much for your insightful answer!

If you had time and were willing to answer a follow-up question,

I'd be grateful:

Is there ANY way to put non-qualified (from an annuity or otherwise) inherited money into my own IRA/Roth IRA? 

From my research, inherited money is unearned and not eligible for IRA contribution,

but I didn't know if there was a way to convert or roll over non-qualified inheritance funds into my own IRA

within 60 days of being inherited or something like that I hadn't turned up.

Thanks!

[dmertz · Accepted solution]

"Is there ANY way to put non-qualified (from an annuity or otherwise) inherited money into my own IRA/Roth IRA?"

You can use any cash that you receive from the non-qualified annuity just like any other cash.  Cash is fungible, meaning that the cash from the non-qualified annuity is no different than any other cash you have in your pocket.  Because a distribution from the non-qualified annuity is not eligible for rollover, there is no applicable deadline to do anything with the cash.  It's just cash.

If you meet the requirements for making an IRA contribution (have compensation from employment, including net profit from self-employment) and, for a Roth IRA contribution, you are not limited by your MAGI relative to your filing status, you can make a regular traditional or Roth IRA contribution.