1. Home
  2. Taxes General Forum
  3. Inherited Annuities

Inherited Annuities

My client's deceased father left him and his sister his retirement accounts. Two of them are IRAs which I will advise the clients to rollover into their own accounts. There are three annuities which have the Trust as the beneficiary. The annuity company told the son that he could take the money all at once or over 5 years. Could they take a distribution with code 4 for death and then roll it over into their own IRAs without going trustee to trustee? Linda Dorfmont E.A., CFP, CSA

> > > > > > > > >
Reply to
DORFMONT
Loading thread data ...

How will they do that? Has there been a recent change in the law? (I'll ask IRS on Tuesday.)

An annuity is not eligible. Just count them lucky to be able to spread it out over the five years.

ChEAr$, Harlan

Reply to
Harlan Lunsford

To be clear to other readers who may not be as familiar with the intricacies of IRA rules; the destination accounts must be properly titled, "Inherited IRA of JoeTaxpayer, beneficiary", and NOT, I repeat, not rolled into an existing non-beneficiary account. That would break the IRA and it would be deemed distributed.

What was the source of the money? If it was from a 403(b) or other retirement plan, perhaps, but I don't believe this can be done with any and all annuities. JOE

Reply to
joetaxpayer

None of this money can be rolled into their IRA's; only a spouse can keep an IRA as an IRA--everyone else must cash them in, although they can sign up for equal, periodic payments. If the tax rate for the Trust will be the same regardless of the amount withdrawn (25%?), then it would depend on the client's opinion of the annuities and how they were performing. IRS Circular 230 Disclosure: To comply with requirements imposed by the IRS, we inform you that any U.S. federal tax advice contained herein (including any attachments), is not intended or written to be used, and cannot be used, for the purposes of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter herein.

Reply to
Brew1

Since when can a non-spouse beneficiary roll an inerited IRA into their own account? I am aware of the change for a deceased employee's retirement plan for a non-spousal beneficiary, but am unaware of any changes for traditional IRA's. Robert A Moore, EA

Reply to
ramscot

Starting for distributions made after 2006. See §402(c)(11), which apparently applies to IRA's as well as other kinds of pension trusts. Stu

Reply to
Stuart Bronstein

BeanSmart website is not affiliated with any of the manufacturers or service providers discussed here. All logos and trade names are the property of their respective owners.