Comments on: Tax Consequences to the Annuity Beneficiary

By: Free Website Submission

Free Website Submission — Sun, 11 Jul 2010 06:23:35 +0000

While inheritance is not taxed to the recipient, any interest or dividend on the money should be taxed. Your annuity company should provide all the tax details. t

By: trevour

trevour — Fri, 18 Jun 2010 18:01:31 +0000

Thank you for sharing this information on annuities. It’s also a confusing subject for me, and this blog is helping me to better understand it.

By: Debbie Smith

Debbie Smith — Thu, 20 May 2010 17:46:10 +0000

Question: My Uncle passed away and my Dad was named beneficiary on my Uncles annuity, unknown to my Dad at the time. Within the five year period, my Dad passed leaving everything to his nine (9) children. My Uncles annuity was paid to my fathers estate, the insurance company paid Federal and State income on the taxable Income amount (my father was 100% disabled did not pay income tax, the minimum amount taken was 10% for both Federal and State Tax). Is there any addiotnal taxes due on this money prior to each child receiving a small portion of funds.

By: Red Cross CNA training

Red Cross CNA training — Wed, 21 Apr 2010 11:30:45 +0000

Thanks for sharing this information. I’m coming upto retirment and I have to admit i find the idea of annuities quite confusing, this post has helped though.

By: Cheap SSL

Cheap SSL — Wed, 31 Mar 2010 12:52:05 +0000

Need advice from the tax guru’s here:

I inherited my mother’s variable annuity when she died in 2002. At the time I decided to keep it because I was in a relatively high tax bracket, therefore it seemed attractive to permit continued tax deferred growth, and the investment choices were quite broad.

Over the ensuing years the value of the account nearly doubled. But over the past year the value has fallen to slightly less than what it was when I inherited, thus my cost basis is lower than the current value.

The period which involved surrender charges is long since over. I am now retired and in a lower tax bracket.

Am I correct in my understanding that if I cash this annuity out, I will not owe any income tax, since the value is less than my cost basis (the value at the date of my mother’s death)?

This seems like a good idea at this time, since there has been no benefit of tax deferral (zero or slightly negative growth over 7 years), the annuity carries higher fees than comparable funds at Vanguard, and I have a need to replenish my cash reserves that I use to augment our pension income. This seems like a better approach than selling equities or funds from my taxable accounts which have gains.

What do you think?

By: Bunn Coffee Makers

Bunn Coffee Makers — Tue, 23 Feb 2010 20:22:37 +0000

This is a great article on a very important subject. Too many times people create a huge nest egg, that ends up being tax prone and in the case of an early death causes the beneficiaries to pay out an enormous portion of the benefits in the form of taxes. One of the most important parts of a successful retirement account is making sure it is as tax friendly as possible!! Great article.

By: The Tax Club Member

The Tax Club Member — Thu, 17 Sep 2009 10:34:56 +0000

The Tax Club helped me in determining the areas where my money could be safe and could help me after retirement. Annuity is one of them and I’m certainly enjoying my retirement.

By: Hogwarts castle

Hogwarts castle — Sat, 18 Jul 2009 17:32:54 +0000

The value of an inheritance or gift is not taxed to the recipient, but any earnings on the money would be taxed as ordinary income. The company paying the annuity would break down the income portion and return of investment portion generally, but if you inherited it you would need a CPA to help you determine the taxable amount.

By: High yeild savings

High yeild savings — Fri, 06 Mar 2009 06:25:52 +0000

Good post. Some things i never considered would be the extra forms to file for taxes. Sounds like ones used for partnerships or mlps. I would suggest people talk to accountant because alot of people do not undertsnad how to figure what is taxable and what is not. High yeild savingss last blog post..Best high yield certificate of deposit rates.

By: Bob Richards

Bob Richards — Mon, 23 Feb 2009 16:19:33 +0000

some answqers to questions:
1. if you are the beneficiary of an annuity and that annuity was a qualified annuity(meaning, the money came from an IRA or company 401k or pension plan), the ENTIRE balance is taxanbe to you.
2. If you are the beneficiary of a non-qualified annnuity (meaning that the original source of funds was plain old savings), you have up to 5 years to take all of the funds out and pay the tax due on the accumulated earnings
3. no matter what you use the money for, #2 above still applies