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Panel lays over bill to require annuity contract providers to correct IRA contribution year designation to match taxpayer notice
Summary
House File 2048 would require insurance companies and annuity contract providers to re-designate IRA contribution tax year when notified within a three-year window, aligning state practice with federal correction guidance; sponsor said the bill conforms state reporting to federal instructions.
The House Tax Committee heard House File 2,048 on April 9, a bill that would require annuity contract providers and insurance companies to re-designate the tax year of IRA contributions when notified of an error within a three-year window so that the contribution counts for the earlier tax year.
Sponsor Representative Tony Klayman said the change would conform state practice to federal guidance in IRS instructions for Forms 1099-R and 5498 and addressed a constituent case in which two IRA deposit checks were credited to different tax years despite a taxpayer memo indicating both were for the same year.
Assistant counsel explained the bill would require re-designation for contributions made in calendar year 2023 if notification is provided within the roughly three-year 5498 window, allowing the amount to count toward the earlier tax year for the state as it does federally.
The committee laid House File 2,048 over for possible inclusion in the omnibus tax bill.
Why it matters: Sponsors said the bill removes an administrative obstacle when financial institutions credit IRA contributions to the wrong tax year and conforms state filing and treatment to federal corrective procedures.
Next steps: House File 2,048 was laid over for possible inclusion in the omnibus tax bill.
