Inherited Annuity

Another choice is called a NonQualified Stretch.

Inherited annuity. What are inherited annuities What is an inherited annuity. For example assume that you inherit an annuity from your spouse and you choose to stick with the original payment structure or the as-is option. Youll pay tax on everything above the cost.

What is an inherited annuity. Youve just received an annuity now what. First things first lets briefly define an inherited annuity.

In todays episode Im going to explain what you can do with your inheritance. Its pretty much your run-of-the-mill annuity thats issued by an insurance or annuity company. But the basic tax formula in that case would be something like this assuming no special deductions no other.

A qualified annuity is an annuity thats purchased using pre-tax dollars through a tax-advantaged account such as a 401k plan or an individual retirement account. This method will provide a way to spread your tax liability while allowing the inheritance to continue growing. It gets pretty complicated especia.

Generally speaking an inherited annuity isnt a special type of annuity thats been hidden away from like a present that your parents didnt want to find. For an inherited annuity that is in an IRA you have 10 years to take the funds. Some annuities feature death benefits that allow the owner to select a beneficiary to inherit remaining funds.

The timing of the tax event depends on the payout structure and your status as a beneficiary. Distributions are 100 taxable income. Nonspousal Inherited Annuity If youre a non-spousal beneficiary you may have the option to transfer the death benefit amount into a new inherited annuity.