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immediate annuity

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L1: immediate annuityIf insurance companies code allsingle life or joint life immediate annuities as72-t exceptions on the 1099R, can an individual purchase such within a non-SEPP IRA, irregardless of the universe of funds for a 72-t calculation, and irregardless of the terms of the annuity. In an IRS audit situation, how would the annuities be viewed? Qualified withdrawals or not?For example: IRA holder (holder’s age 56, spouse age 55) has funds in a non-SEPP IRA of $100,000. The holder wants to try to maximize theirmonthly income stream bypurchasing one of the following: A) joint lifetime annuity of $100,000 pays $516 monthlyB) Single lifetime annuity of $100,000 pays $558 monthlyC) 7 year Period Certain of $100,000 pays $1210 monthlyD) 5 year Period Certain of $100,000 pays $1688 monthlyAnnuity payments may not be exact here, but the concept is what’s of interest.I look forward to your opinion.2008-11-10 13:45, By: action, IP: [127.0.0.1]
L2: immediate annuitya & b are ok – they are based on an annuity payable over life and would probably qualify as a sepp.c and d are not ok – they are not based on an annuity payable over life and would not qualify as a sepp.c and d could be used as part of a custodial arangement where the payments were made to the custodial account. however, the payment from the sepp would have to be based on one of the 3 acceptable methods as outlined in 89-25 and re-affirmed in 2002-62. 2008-11-10 13:54, By: gfw, IP: [127.0.0.1]

L2: immediate annuityThanks, I thought that might be the case…glad you concur. Wish it could have worked for C& D options as well…but I understand why now.2008-11-10 14:01, By: action, IP: [71.56.191.195]

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