1099-R from "Free Look" Annuity re-issue?

[24601NoMore]

Why would we get a 1099-R (indicating a potentially taxable distribution) from an insurance carrier on a Multi-Year Guaranteed Annuity (MYGA) that we did a "free look" re-issue on?

We bought a MYGA through BluePrint Income earlier this year, and the rate went up during the "free look" 30 days that we had to review the actual contract. So, naturally, we asked for the higher rate which they gave us.

That generated a new contract and a new account #, but we never got the money back into our hands. Yet, we just received a 1099-R for the full amount of the annuity, with the distribution code being "7D".

I looked up 7D, and it says it is a Normal distribution from a non-qualified annuity. "D" also apparently means "Annuity payments from nonqualified annuities and distributions from life insurance contracts that may be subject to tax under section 1411.".

Why on earth would we get a 1099-R for a re-issue of a MYGA? It essentially says we got this (very large) distribution that is potentially taxable..

More importantly..how in the heck would we report this on our taxes? I don't want the IRS thinking we got this big chunk of taxable $$ in our hands that we never got.

 

[pb4uski]

I would have thought that a cancel and reissue would be like a 1035 exchange rather than a distribution.

Was the premium on the contract that was cancelled new money or a 1035? Is the 1099-R the same as the deposit or different? Have you talked with either Blueprint or the carrier? Was it the same carrier?

 

[24601NoMore]

Premium was new money. Same carrier & same policy type/product name. Just a different rate.

I called the carrier this AM and it appears there were FIFTY (!) callers ahead of me. Waiting on a call back from them. Will also ping Blueprint if I don't get a satisfactory answer from the carrier.

This seems like it could cause one heck of a mess and a lot of potential confusion with the IRS...we never touched the money after sending the check to the carrier. But the carrier is saying we got a big lump sum distribution. What a cluster..

 

[24601NoMore]

Talked to the carrier. They admit it was a screw-up on their part and are going to "re-issue" the 1099-R.

I do wonder if this will still cause potential issues with tax returns, though.

How does that work when an institution issues then "re-issues" the same 1099-R? Does the IRS actually get that right?

 

[aja8888]

Talked to the carrier. They admit it was a screw-up on their part and are going to "re-issue" the 1099-R.

I do wonder if this will still cause potential issues with tax returns, though.

How does that work when an institution issues then "re-issues" the same 1099-R? Does the IRS actually get that right?

I think they send out a corrected copy.

 

[MRG]

Talked to the carrier. They admit it was a screw-up on their part and are going to "re-issue" the 1099-R.

I do wonder if this will still cause potential issues with tax returns, though.

How does that work when an institution issues then "re-issues" the same 1099-R? Does the IRS actually get that right?

Yeah, they'll figure it out. Great big PIA because someone didn't test all the conditions.