How to Change an IRA Qualified Annuity

Annuities can be considered either qualified or non-qualified, meaning they can be an IRA annuity or non-IRA annuity respectively. Over time you will be required to take a minimum distribution out of your qualified IRA annuity. These requirements begin at age 70 1/2 and usually mean around a 10 percent distribution of the account value depending on whether you are married and how old you and are spouse are. You may not need these funds, and therefore may want to convert the distributions into another non-qualified annuity.

Things You'll Need

• IRA statement (most recent)

Instructions

1. Open your annuity IRA statement and review the balance of the account.

2. Call the customer service representative and ask for a "Required Distribution Form." A required minimum distribution is the amount the IRS states you must take out after age 70 1/2 from IRAs.

3. Confirm with your tax advisor how much you are required to pull out of the account.

4. Fill out the paperwork, sign it, date it and submit it to the company or your agent.

5. Deposit the check into your checking account.

6. Fill out a new annuity application that is "non-qualified" opening it with the amount you receive from the required minimum distribution.

7. Take each year's required distribution and use the proceeds to fund this same non-qualified annuity account rather than open a new annuity each year.

Tips & Warnings

• You cannot do an internal transfer at the annuity company to take the money and place it into a non-qualified annuity. Nor will you be able to send in the distribution check to fund the new annuity.

References

• Immediate Annuities: Non-Qualified Annuity Tax Rules