Inheritated Non-Qualified Annuity

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  • KC-CPA
    Member
    • Mar 2012
    • 91

    #1

    Inheritated Non-Qualified Annuity

    Husband and wife are beneficiaries of a non-qualified annuity. Are there any mechanisms to roll their respective proceeds into a decedent IRA and defer the taxes?

    I have never had this question but they are telling me they can do this. I refrain from answering annuity questions like this right away as nothing ever seems to be straight forward with them.
  • appelman
    Senior Member
    • Jan 2010
    • 1195

    #2
    I'm fairly certain that you cannot convert it to an IRA.

    And that will be true even if it is "inheritated." I can't lay hands on a primary citation, but here are a couple of secondary references:

    The Motley Fool has premium stock recommendation and portfolio management services with different goals: dividend, growth, value, retirement, income, preservation & options strategies.


    Evan Appelman, EA

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    • Jiggers
      Senior Member
      • Sep 2005
      • 1973

      #3
      I would agree, this is a non-qualified plan. You can't rollover a non-qualified to a qualified plan (IRA).
      Jiggers, EA

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      • Burke
        Senior Member
        • Jan 2008
        • 7068

        #4
        Absolutely correct. The term "non-qualified" means it is not an IRA, 401K, or any of those plans. It is simply a tax-deferred annuity, purchased with after-tax money, for which they were apparently the beneficiaries. No rollover is allowed. However, the basis would not be taxable income, only the earnings. The company will issue a 1099R for each distribution, and it should reflect the non-taxable basis.

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