Form to use to report 1035 exchange on tax return

[jaymarv]

I did a 1035 exchange between variable annuity contracts. What form do I use to report this?

[Coleen3]

Did you get a 1099-R?

[jaymarv]

yes, for the annuities sold

[Coleen3]

Just enter your 1099-R exactly as it appears. You should have a code 6 in Box 7.

 Here's how to enter your 1099-R in TurboTax:

1. Open (continue) return if you don't already have it open.
2. Inside TurboTax, search for 1099-R or 1099R (lower-case works too) and then click or tap the "Jump to" link in the search results.
3. Answer Yes on the Your 1099-R screen, then click or tap Continue.

What is a 1035 Tax Free Exchange?

A 1035 tax free exchange is the I.R.S. tax code that allows for the rollover of a non-qualified annuity (or transfer of a life insurance policy) to a new annuity or life policy of equal or greater value. Capital gains and/or income taxes will not be realized from this type of transfer when completed properly.

There are only three examples of a 1035 exchange:

• Annuity to Annuity
• Life Insurance to Life Insurance
• Life Insurance Cash Value to Annuity

The I.R.S. does not allow for a 1035 exchange from a tax deferred annuity to any type of life insurance policy. If you want to buy a life insurance policy with the proceeds from an existing annuity, you will first have to annuitize (or surrender) your annuity and pay taxes on any deferred gains.

https://www.ohioinsureplan.com/understanding-the-1035-tax-free-annuity-and-life-insurance-exchange/

[mlw2]

yes, however it doesn't reflect the loss amount

[mlw2]

I have code 7D in box 7

[DaveF1006]

To qualify, it would have to be reported as a 1035 exchange with a code 6 in box 7. if you rolled this over into another annuity account, you would need to contact the issuer to the 1099R to send a corrected 1099R reflecting a Code 6 in Box 7.

[pbthepest]

I am using Turbo Delux. I entered a 1035 transfer using the information on the 1099-R for Federal Taxes. Review showed no errors. The Massachusetts State Tax ,Form 1  under pensions and annuities smart worksheet "Check this entry".  "Form 1: Tax-Exempt Pension should not be entered directly on Form 1 for state electronic filing." 

[Cynthiad66]

@pbthepest

Once you have determined that your pension is indeed exempt on your MA return, you can follow these steps to make sure it is entered correctly in TurboTax:

1. Select the “Federal Taxes” tab
2. Select the “Income” tab
3. Select “5. IRA and Pension Distributions” Add or Edit button
4. Enter the pension information (payer’s name, gross distribution, etc.)
5. Continue through the interview until you get to the screen titled “Select Your State” and select Massachusetts
6. Continue to the next screen and indicate whether the pension is:
   1. Federal government pension that I contributed to
   2. Military and survivors’ pension
   3. MA state or local govt pension that I contributed to
   4. Certain state court judges’ pension
7. Select the “State Taxes” tab and complete the Massachusetts interview
8. If one of the 4 options were selected in step 6 above, the pension is excluded from Form 1, line 4 and an explanation statement is attached to your Massachusetts return with the reason for excluding the pension

Use this link for additional information:  Massachusetts Non Taxable Pension

I hope this helps clear things up for you.

[albill]

received a 1099R WHEN POSTING INTO TURBO TAX AND GOING TO BOX 7 AND, PUTTING IN CODE6. IT SHOULD ISSUE A 1035. IT DOESN'T AND INCLUDES THE AMOUNT OF THE VALUE AS INCOME .HOW TO HAVE THIS CORRECTED?

[JulieS]

Can you please clarify your question?

If you have a Section 1035 exchange, the amount in box 1 of Form 1099-R appears on line 5a, but is not included in your taxable income on 5b. 

Nothing gets "issued" by TurboTax. Your Form 1099-R should have a number in box 1, $0 or blank in box 2a and box 7 should show code 6. Is that what your 1099-R looks like?

[davtabitriad]

yes

[DawnC]

You'll get a Form 1099-R if you received $10 or more from a retirement plan.  You're required to report a 1099-R on your tax return, even if the distribution isn't taxable.

Here's where to enter your 1099-R in TurboTax:

1. Open or continue your return.
2. In the Federal section, select Wages & Income.
3. Scroll to locate Retirement Plans and Social Security.
4. Select Start or Revisit next to IRA, 401(k), Pension Plan Withdrawals (1099-R).

You can also find the 1099-R section using Search. Open your return, enter 1099-r in the search bar, and select the Jump to 1099-r link.   @davtabitriad