Annuity

[Kram BergGold]

My client' Mom died leaving a number of annuities. How long can my client, the benificiary, delay cashing in the annuities before a penalty is incured?

[sea-tax]

My client' Mom died leaving a number of annuities. How long can my client, the benificiary, delay cashing in the annuities before a penalty is incured?

I am not sure what penalty you are refering to. But I will take a stab at it and guess you are refering to the annuity companies penalty.

I would look at the prospectus or contract documents, I would venture to guess that it will say in there. You can also contact the insurance company or annuity company that holds the contract. the problem is that with so many different types of policies out there that you have many different rules.

[S T]

Annuities

Sea-Tax is right there are so many annuity plans out there.

Is this a qualifed annuity (such as in IRA) or a non-qualified (such as investment) That might have some bearing.

It is my understanding that some Insurance Companies will not penalize at all on the death payout, while some others will. You will have to look to the Annuity Contract or contact the company.

Example: There could be a penalty if the beneficiary takes the lump sum death payout, but then there would be no penalty from the Insurance Company if the beneficiary took a payout over 5 years.

I do not think there is any penalty on taxes for the payout or delay of payout (investment) but maybe if annuity is a qualified plan (IRA). 1099R would most likely report the total amount in Box 1(total distribution) and the taxable amount in Box 2, which would more than likely represent the earnings on the account, and then should be a code 4, death payout.

Hope this helps.

Sandy

[John of PA]

Deferred Annuity

Am I correct that this inheritace of Annuities is taxable to the beneficiary, regardless of whether they are cashed in or not (that is taxable based on the decedents tax cost basis of the annuity).