Cashed an Insurance policy and placed a portion in my SEP account. How do I report this on my tax return?

[vhurgoi]

I cashed a Life Insurance policy and on the day of distribution I put a portion of it in my SEP account. Do I have any tax benefits as a result of doing this?

[Marketstar · Accepted solution]

You may be able to get a deduction from taxable income for a contribution to your SEP account, and will enjoy tax deferred growth potential, but you will not get an additional tax benefit from cashing out an insurance policy to fund the SEP.

[vhurgoi]

Thank you very much for your answer. The issue that I still have trouble with is that both the insurance funds and the SEP funds are pretax money, money taken out of my paycheck prior to me paying any taxes on, and money the insurance company earned during the years they held my policy for which I also did not pay any taxes on and I understand both are taxable at the time of distribution. The funds I rolled into my SEP account was done the day I received the check from the Insurance Co. If I have to pay taxes on the entire sum received now from the Insurance Co., that means that I will also have to pay taxes again when payments from the SEP account including these very same funds will be distributed to me. Double taxation indeed. If the first part of your answer does apply to me how do I go about completing the tax return? Under 1099R form I did not see any clear way as to how I can do this. I truly appreciate your time and hope you can clarify this for me.
Thank you in advance and Best Regards,
Dan