Inherited Annuity IRA
A non-spouse beneficiary has inherited an IRA variable annuity from his sister. The insurance company is stating that the inheritance of the IRA annuity is fully taxable because it is going to a non-spouse beneficiary. We had hoped to put the proceeds into an Inherited IRA for the beneficiary and stretch distributions over his remaining life expectancy. Does this sound right that a non-spouse beneficiary CAN’T stretch an Inherited IRA variable annuity?
Thank you!
Permalink Submitted by Alan - IRA critic on Wed, 2013-04-10 23:15
The beneficiary may want to request a full copy of the contract to see what it says regarding beneficiary options if they want to keep the annuity. Otherwise, they should request a direct transfer to another inherited IRA set up with the custodian of their choice, and then they can stetch the inherited IRA. In the meantime, they should make it very clear to the insuror that they do NOT want a distribution of any kind. Discussion with senior IRA staff with the insuror may also be advisable.