Here is where the plan is falling off the rails: the admin in the office that sold the product says that the annuity can only be taken as a distribution and cannot be disbursed on a custodian-to-custodian basis into another IRA. Can this possibly be true? [The players on the MasterDex side have already made their money selling and servicing the product, so I don't see the incentive to them create an additional obstacle. The money is exiting the product either way.]
Let's say they are incapable of doing this, and the owner of the IRA opts in for a yearly payment on, say, July 1, it gets paid as a distribution, and then signed over to a Vanguard Rollover IRA. Since July 1 2018 is Sunday what if the check is issued on Monday July 2? And then next year the check is issued on Monday July 1 2019? It's not clear to me that this meets the letter of the law for IRA rollovers done by individuals. Does the fact that the IRA would be annuitized with an annual payout count as "close enough" for the IRS?
Obviously one could bite the bullet and pay the surrender charges, take the lump sum payout, and then roll it over. I am looking for alternatives that get the money out of annuity jail and keep it in an IRA so as to avoid a tax consequence.Waiting period between rollovers. Generally, if you make a tax-free rollover of any part of a distribution from a traditional IRA, you cannot, within a 1-year period, make a tax-free rollover of any later distribution from that same IRA. You also cannot make a tax-free rollover of any amount distributed, within the same 1-year period, from the IRA into which you made the tax-free rollover.
The 1-year period begins on the date you receive the IRA distribution, not on the date you roll it over into an IRA.
Many thanks.