Frequently Asked Questions
IRS Circular 230 Disclosure: Any tax advice contained in this communication (including any attachments) is not intended to be used, and cannot be used, to avoid penalties imposed under the U. S. Internal Revenue Code, and was written to support the promotion or marketing of the transactions or matters addressed here. Individuals should seek independent tax advice based on their own circumstances.
Q: The Employee Contributions or Insurance Premiums (Box 5) amount reported on my Form 1099 is not correct. What should I do?
A: If you believe the information on your Form 1099 is incorrect, please contact your Tax Advisor. If after review, you and your advisor believe that an error has occurred, please contact us. Phoenix will research the appropriate information for your policy/contract and send you an explanation. If a change needs to be made, Phoenix will send you a corrected Form 1099. [Please note that if the policy/contract was issued as an 1035 exchange, we may not have received the necessary information from the previous carrier. In this case, you would need to contact the carrier(s) and have the information sent to Phoenix.]
Q: The tax identification number and/or Social Security information on my Form 1099 is not correct. What should I do?
A: Corrections to your Tax Identification Number/Social Security Number must be submitted on a signed Form W9. This form is available on the Web at www.IRS.gov or by contacting Phoenix. Upon receipt of Form W9, Phoenix will make the necessary corrections.
Q: My life insurance policy lapsed and I did not receive any money. Why did I receive a Form 1099-R?
A: If at the time your policy lapsed there was an outstanding loan and a taxable gain, you would receive a Form 1099-R. While a policy is active, generally any cash loans or loans to pay premiums would be considered non-taxable. When a policy terminates or lapses, any outstanding loan on a policy with a gain is considered a distribution and becomes a taxable event.
Q: I exchanged my policy under Section 1035 as a non-taxable event. Why did I receive a Form 1099-R?
A: Phoenix is required to report all exchanges processed under Section 1035 of the Internal Revenue Code (IRC). In most instances, these exchanges are reported as non-taxable events. As a result, the taxable amount field would be left blank. You can verify this by referring to the Distribution code(s) (Box 7) on the form.
Q: Why is my form 1099-R showing a taxable amount when it was exchanged under Section 1035 as a non- taxable event?
A: An exchange may be taxable, if at the time of the exchange, there was a loan and a gain. The taxable amount would be the lesser of the two. For example, if at the time of the exchange the gain is $5,000 and the loan balance is $6,000, the gain of $5,000 would be reportable as a taxable gain. If, at the time of the exchange, the loan was transferred over to the new contract/policy, the exchange would remain a non-taxable event. Contact Phoenix to request a corrected Form 1099-R.
Q: I transferred my qualified plan to another company. Why did I receive a Form 1099-R?
A: Phoenix is required to report all exchanges processed under Section 1035 of the Internal Revenue Code (IRC). In most instances, these exchanges are reported as non-taxable events. This can be verified by referring to the Distribution code (Box 7) on your Form 1099.
Q: I transferred my qualified plan to another company. Why did I receive a Form 1099-R indicating a taxable amount?
A: Your Form 1099-R should show a taxable amount of zero. If you believe your taxable amount should be zero, please contact us.
Q: I made a direct rollover of my IRA contract to a contract with another company. Why didn't I receive a Form 1099R?
A: A direct rollover from one IRA to another IRA is not reportable on Form 1099-R.
Q: I did not take a distribution from my annuity contract, but I received a Form 1099R. Why?
A: Although you may not have taken any distributions, you may receive a 1099… If the owner of the contract is an entity other than an individual (a corporation, for example), the contract loses its annuity status for tax purposes, and, in general, the gain is reportable each year. 2) If the ownership on a contract is changed, any gain at the time of the ownership change is taxable and reportable to the previous owner.
Q: There is no Employee Contributions or Insurance Premiums (Box 5) amount shown on my Form 1099-R, and I made after-tax contributions to my IRA. How do I correct that?
A: You should submit IRS Form 8606 with your tax return to report any after-tax contributions you may have made to your IRA.
Q: I received a Form 1099-R with a Distribution code 7, and I am under the age of 59 ½. What should I do?
A: Please consult your Tax Advisor to confirm the distribution code shown is correct. If it is determined that the distribution code is incorrect, please contact us to request an updated 1099-R.
Q: Why did I receive a Form 1099-R for my loan on my 403(b)?
A: If your loan defaulted during the year, generally this results in a taxable event and you would receive a Form 1099-R.
Q: Why did I receive more than one Form 1099-R?
A: You may receive multiple Form 1099-Rs if you took distributions for more than one type of product, the distribution code is not the same, or there are different service phone numbers. For example: