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for the individual's benefit. Sec. 219(e). Any amount paid by
an employer to an IRA "shall be treated as payment of
compensation to the employee", includable in gross income for the
taxable year, whether or not the payment is deductible under
section 219(a). Sec. 219(f)(5).
IRA Distributions Taxable as Annuities
An amount paid out of an IRA must generally be included in
gross income by the distributee in the manner provided under
section 72, annuities, as modified by section 408(d)(1) and (2).
An individual's gross income includes amounts received as annuity
payments. Sec. 61(a)(9). In general, section 72 amounts are
includable in income except to the extent they are considered to
be a reduction or return of premiums or other consideration paid.
Sec. 72(a) and (b); sec. 1.72-1(a), Income Tax Regs.
To determine the extent to which distributed amounts are a
reduction or return of premiums or other consideration paid,
section 72 distinguishes between "amounts received as an annuity"
and "amounts not received as an annuity". Sec. 1.72-1(b)-(d),
Income Tax Regs.
Amounts are "received as an annuity" if they meet the
requirements of section 1.72-2(b)(2) or (3), Income Tax Regs.,
including the requirement that the amounts be payable in periodic
installments at regular intervals. Any other amounts to which
section 72 applies are considered "amounts not received as an
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Last modified: May 25, 2011