BulldogTom Posted March 6, 2015 Report Share Posted March 6, 2015 Your thoughts please. Elderly client comes in this year. Says he can't understand why he got 2 1099R's for his annuities. Said he gifted them to his kids. Turns out he withdrew 14K from each annuity and gifted the proceeds to his kids. I can deal with that. He just did not understand the transaction. We explain that to him and he gets it, but that was not what he thought he was trying to do. Then he says he bought these annuities at the same time. Why is one fully taxable and the other partially taxable. Paid the same amount for each. My take is they are 2 different types of annuities. If they were the same, why wouldn't he have put 70K in one rather than 35K in each. I am not real well versed on annuities, but I am guessing that one has a life insurance policy purchased by the original contribution and the other one does not, hence the different tax treatments. We called the broker, but they did not sell them the annuities, they were transferred in from another institution and they picked up the basis information from the original broker. This was from the broker's secretary. Can anyone shed some light on this? Am I on the right path in my thinking? Thanks Tom Newark, CA Quote Link to comment Share on other sites More sharing options...
Lion EA Posted March 6, 2015 Report Share Posted March 6, 2015 Have him pull out his paperwork from the purchases. Quote Link to comment Share on other sites More sharing options...
BulldogTom Posted March 6, 2015 Author Report Share Posted March 6, 2015 Have him pull out his paperwork from the purchases. Yeah, I asked. The part about "elderly" really means "it is time for his kids to take over his finances". He can barely remember what we told him on the last phone call. He called me and left a message when he got my letter at the beginning of the tax season to tell me he would be coming in when he had all his documents. I called him back and told him that would be fine, we would make an appointment for him whenever he was ready (I try to return all messages so that my clients know that I got their message). About an hour later, he calls me and asks who I am and why I called him. Told him who I was and that I had returned his call and we just talked about an hour ago about setting up his tax appointment. Forgot that he called me or that I talked to him just an hour ago and proceeded to be offended that I would try to make an appointment when he does not have his documents yet. It is really sad. Tom Newark, CA 2 Quote Link to comment Share on other sites More sharing options...
Elrod Posted March 6, 2015 Report Share Posted March 6, 2015 Unless your client can produce all his original records, only the administrator of that plan can answer your ?..Tom I have had situations in the past like yours, and when the client had the changed out broker, DIG......Files mysteriously appeared. 1 Quote Link to comment Share on other sites More sharing options...
Randall Posted March 6, 2015 Report Share Posted March 6, 2015 (edited) One may be an IRA, fully taxable. Maybe the original money was an IRA or 401 rollover. Of course if he's well over 70 1/2, he would have had minimum distributions in previous years. The one with basis is not an IRA, just after tax dollars he put into it. Edited March 6, 2015 by Randall Quote Link to comment Share on other sites More sharing options...
BulldogTom Posted March 6, 2015 Author Report Share Posted March 6, 2015 One may be an IRA, fully taxable. Maybe the original money was an IRA or 401 rollover. Of course if he's well over 70 1/2, he would have had minimum distributions in previous years. The one with basis is not an IRA, just after tax dollars he put into it. Definitely not an IRA. All after tax contributions. Tom Newark, CA Quote Link to comment Share on other sites More sharing options...
Lion EA Posted March 6, 2015 Report Share Posted March 6, 2015 Oh, my, Tom. Yeah, as I get older, my clients get older. Do your best. BUT, if you have to dig or wait while someone digs or suspect there's a better outcome out there, put him on extension. Have him pay in with the extension and pay his first ES payment, but put him on extension. The kids may get involved someday and think someone's cheating their father. Document, document, document. 4 Quote Link to comment Share on other sites More sharing options...
MsTabbyKats Posted March 6, 2015 Report Share Posted March 6, 2015 I'm gonna bet he did a 1035 exchange at some point and split the proceeds into 2 annuities. One was with fully funded with the "untaxed gain" on the original annuity and the other with a combination of previously taxed money/untaxed gain. But...does it matter? The 1099-R gives you the taxable amount. 1 Quote Link to comment Share on other sites More sharing options...
jasdlm Posted March 6, 2015 Report Share Posted March 6, 2015 (edited) Or . . . he did the 1035 exchange and the receiving company never picked up the basis. I have had that happen more than once. Then you have to try to track down the basis from the original company, and it is no quick task. I don't know what company the annuity was from, but the company that didn't pick up the basis (twice that I've seen) was Symetra. Edited March 6, 2015 by jasdlm 1 Quote Link to comment Share on other sites More sharing options...
B. Jani Posted March 7, 2015 Report Share Posted March 7, 2015 If he has original contract with him, the last few pages are the copy of the application.As a full time insurance professional, my educated guess is (1) one is some kind or rollover from either retirement plan of life insurance and the (2) is newmoney invested same as the rollover money that is why cost basis is different on both contract.Please review the copy of contract he has to see the copy of application at the end pages.Hope this helps. 1 Quote Link to comment Share on other sites More sharing options...
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