Annuitization and rollover | Ed Slott and Company, LLC

Annuitization and rollover

Client annuitized an IRA annuity and commuted the payments and received the check. Is the commutation amount eligible for rollover? My understanding is that lifetime annuity payments are not eligible for rollover unless they are for less than 10 years but I'm not sure about a commuted amount.

The 10 year limit only applies for purposes of determining what is an eligible rollover distribution from a qualified plan. For an IRA distribution including a commuted balance, the only rollover restriction is the amount of the payment that would be considered an RMD for the annuitized IRA account for the commutation year. That amount is what would normally have been distributed for the year had commutation not occurred. The rest is eligible for rollover. 

 

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