Taxation of Pre-TEFRA Non-Qualified Annuities

Home Fairmark Forum Retirement Savings and Benefits Taxation of Pre-TEFRA Non-Qualified Annuities

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  • #3188
    kaneohe
    Participant

    Just looking for confirmation…..I have always thought that non-qualified Pre-TEFRA annuities are taxed basis first so no tax on the first $$ out on
    a partial withdrawal. At least one rep from one insurance company (and the person he consulted) believes the opposite……that gains come first.
    A rep from another company agreed w/ me.

    Annuity purchased in 1979 and in 1035 exchange in 1995 or so was moved to
    another company.

    Of course, perhaps it doesn’t matter what the rep thinks but what the 1099 coder does.

    #3189
    Alan S.
    Participant

    Kaneohe, you are correct. Investment in the contract comes out first and the subsequent exchange of a pre TEFRA annuity does not change that.

    #3190
    kaneohe
    Participant

    Thanks for the confirmation , Alan. Thought I should take it out while I’m here to defend the idea……….otherwise it might get taxed a second time.

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