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You've spent years planning for your family's wellbeing and now it's time to capitalize on your assets. Whether you're taking distributions from an IRA or tapping equity from a whole life policy, you're generating a taxable event that you must plan for.
Our FAQ section addresses common tax questions related to policies, distributions, conversions and many other topics.
Keep in mind each person's tax situation is unique: make sure to review your state, local and federal tax codes. Regulations change often, so keep yourself informed. Call your legal or tax advisor for more in-depth information.
Form 1099-R is sent when distributions or other policy activity occurs that is reportable to the IRS.
Form 1099-INT is sent when you earn or receive interest that is reportable to the IRS.
Forms 1099-R and 1099-INT will be available on MyNYL or mailed to you by January 31st each year.
Distributions from a qualified annuity are reported as fully taxable ordinary income. A 10% IRS tax penalty may apply if you are under 59 1/2 at the time of distribution.
Common 1099 Distribution Codes
| 1 | Early Distribution – Under 59 ½ - No Known Exception |
| 2 | Early Distribution – under 59 ½ - With Exception |
| 4 | Death – includes disbursements from inherited IRA’s |
| 6 | Section 1035X |
| 7 | Normal Distribution (Over 59 ½) |
| D | Used to identify payments (annuitized or non-annuitized) from a non-qualified annuity contract or annuitized payments from a life insurance contract that may be subject to a tax on Net Investment Income |
| G | Direct Rollover of a distribution to a qualified plan |
| J | Early Distribution from Roth IRA – under age 59 ½ |
| Q | Qualified Distribution from Roth IRA – over age 59 ½ |
| T | Roth IRA Distribution , exception applies - over age 59 ½ and policy was not held for five year holding period |
| W | Informational only reporting for either:
|
A distribution code W used to report:
Charges made against the cash surrender value of your policy to pay for Long-Term Care insurance coverage or
Charges for the accelerated death benefit rider deducted from the cash value of the policy.
These charges are not treated as taxable income for federal income tax purposes and no action is required on your part.
Form 1042-S is for Foreign person’s US Source income subject to withholding.
This form will be available on MyNYL or mailed to you by March 15th each year.
Chapter 3 withholding applies only to certain payments made to a payee that is a foreign person. It does not apply to U.S. persons. Chapter 4 withholding generally applies to foreign entities with no tax certification documents (Form W-9 or W-8) or incorrectly completed tax certification documents.
No. The value of a QLAC is not considered for purposes of calculating the RMD required for any of your other IRAs. The income payments under a QLAC, which generally must begin no later than age 85, should automatically satisfy the RMD requirements for the amounts used to fund the QLAC. Please consult your own tax advisors to determine the RMD requirements for any other IRAs you own.
The SECURE 2.0 Act of 2022 raised the age that IRA owners must begin taking RMDs from 72 to 73.
The Internal Revenue Service (IRS) requires most owners of tax-qualified annuity contracts to take a withdrawal—referred to as a Required Minimum Distribution (RMD)—from their annuity contract each calendar year. These RMD rules established by the Internal Revenue Code help to ensure that your tax-qualified annuity is being used for its intended purpose—to provide retirement income. If you don’t satisfy your RMD requirements, you may face tax penalties.
The Internal Revenue Service (IRS) requires most Individual Retirement Annuity (IRA) and Tax-Sheltered Annuity (TSA) owners who are age 73 or older, and most Inherited IRA owners regardless of age, to take an RMD from their annuity contract each calendar year.
The deadline (for the policy owner) to take their RMD is typically December 31st. For first year distributions the deadline is extended to April 1st of the following year.
Click here for more information on RMD.
Form 5498 reports all types of contributions (including rollovers*, conversions, recharacterizations) made to your IRA. It may also report your year end Fair Market Value (FMV) and if you must take a Required Minimum Distribution (RMD). The following IRA plans will generate an IRS Form 5498 when a contribution is made: Traditional IRA, Roth IRA, SEP IRA, SIMPLE IRA.
Form 5498 is strictly informational and not filed with your tax returns, however it is important to keep a copy for your own records. For tax advice, please consult your tax advisor.
* If the contribution is rolled over directly from an IRA to another eligible IRA (also known as a Trustee to Trustee transfer), the rollover is considered tax-free and is not reported on a Form 1099-R or a Form 5498.
New York Life will mail or eDeliver your Form 5498 by May 31st.
The deadline for contributions to Traditional IRA & Roth IRA plans extends beyond the calendar year. Contributions made between January 1st through April 15th of a year and designated as made for the prior year will be reported on a Form 5498 for the prior year** (unless April 15th is a holiday or weekend- then the next business day). For tax advice, please consult your tax advisor.
** Contributions must be post marked by end of business on April 15th in order to be reported on a Form 5498 for the prior tax year. When you contribute to your Traditional IRA or Roth IRA, you will need to specify for which year the contribution is being made.
Form 1098-Q is sent to purchasers of Qualifying Longevity Annuity Contract (QLAC). It reports premiums paid into the QLAC during the prior tax year, the fair market value of the contract as of December 31st, and other information about the QLAC.
Form 1098-Q is strictly informational and not filed with your tax returns, however it is important to keep a copy for your own records.
Form 1098-Q will be mailed by January 31st annually, beginning with the first tax year premiums are paid and ending with the earlier of the year in which the owner reaches age 85 or passes away.
If you have any further questions regarding this matter, please contact our Customer Service area at the phone number referenced on the front of your tax form.
For tax advice, please consult your tax advisor.