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Author: 2gynkv Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76419  
Subject: Tax-deferred annuity Date: 10/20/1998 2:00 AM
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Hello All,
I have a tax-deferred annuity account worth about 2K. I never claimed the principal off my income back in 95 when I opened it.

Can I, and if so, How do I roll-over this account into my Roth IRA? Do I first have to roll it over into a traditional IRA?

Since I never took a deduction for the principal will I still owe tax on the transfer?

Thank you, 2gynkv
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Author: lorijeff Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 6109 of 76419
Subject: Re: Tax-deferred annuity Date: 10/20/1998 6:10 AM
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Dear 2gynkv,

I've been wondering myself about tax deferred annuities. I'm self-employed but realized that the money I was putting into my SEP-IRA wasn't going to be enough to retire on--unless I developed the desire to live in a cardboard box.

I took a part-time sales job so that I could have a regular IRA in addition to the sep, and I started a tax-deferred, variable annuity.

Here's my question--at some point down the road, if I wanted to simplify my paperwork by consolodating everything, can the annuity money be transferred into an IRA???

Thanks everyone!! I've learned so much here!

Lori



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Author: TMFPixy Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 6127 of 76419
Subject: Re: Tax-deferred annuity Date: 10/20/1998 1:00 PM
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Greetings, 2gynkv, and welcome. You asked:

I have a tax-deferred annuity account worth about 2K. I never claimed the principal off my income back in 95 when I opened it.

Can I, and if so, How do I roll-over this account into my Roth IRA? Do I first have to roll it over into a traditional IRA?

Since I never took a deduction for the principal will I still owe tax on the transfer?


You have an annuity purchased with after-tax money. Although the earnings on that annuity are tax-deferred, the annuity itself is not an IRA or a tax-qualified retirement plan. Therefore, it is not eligible for transfer to an IRA under any circumstances. If you surrender it now for its cash value, you will almost certainly pay a surrender fee to the insurance company that sold it to you. Additionally, you must pay taxes on any earnings over an above your cost of that annuity. Your basis (i.e., purchase price) will not be taxed because you've already paid taxes on that amount. Further, if you are under the age of 59 ½, you will pay an additional 10% early withdrawal penalty on all earnings.

Regards….Pixy


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Author: TMFPixy Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 6129 of 76419
Subject: Re: Tax-deferred annuity Date: 10/20/1998 1:01 PM
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Lori, you asked:

I've been wondering myself about tax deferred annuities. I'm self-employed but realized that the money I was putting into my SEP-IRA wasn't going to be enough to retire on--unless I developed the desire to live in a cardboard box.

I took a part-time sales job so that I could have a regular IRA in addition to the sep, and I started a tax-deferred, variable annuity.

Here's my question--at some point down the road, if I wanted to simplify my paperwork by consolodating everything, can the annuity money be transferred into an IRA???


Unless the annuity is already inside an IRA, then the answer is no. See my response to 2gynkv for details.

Regards…..Pixy



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