Annuity Taxation Tip2018-01-20T13:58:51+00:00

Taxation of Annuity Proceeds

While Living: Non-Qualified-Gifting

Gifted to beneficiary, tax liability is passed to owner, subject to annual gift exclusion – currently $14,000. Client may use lifetime exclusion while living. Gift tax considerations to be accounted for, and dealt with, in the future in regard to the lifetime $1 million limit. If you are in India make sure you apply for pan card, which is a unique card for each tax payer.

Upon Death: Non-Qualified

Beneficiary pays income tax on value above basis.

  • Option 1 – Payment directly to beneficiary Beneficiary pays income taxes
  • Option 2 – Beneficiary IRA or stretch IRA Follows date of birth of beneficiary(s) Pays RMD to beneficiary Beneficiary pays income taxes

**Clients should consult their tax advisors because four tax questions may be at issue – state income tax, federal income tax, federal estate tax, and state inheritance tax.

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