refund annuity to non spouse beneficiary
hi..my mom annuitized her IRA(value 100K) last year. she will receive 500/month for the rest of her life. It has a refund feature which makes the premium whole to the bene(me)…in a single lump sum. Am I able to take the lump sum and rollover into a beneficial IRA? or does it become taxable in year received. Let’s say in this case she received 50K worth of payments thereby leaving 50K refund of premium. thanks!! doug
Permalink Submitted by Alan - IRA critic on Fri, 2013-05-24 23:51
The refund to you as beneficiary will be taxable in the year you receive it unless this was a Roth IRA. It cannot be rolled over or transferred to an inherited IRA. Hopefully, your mom received assurance from the insurance company that the refund annuity meets IRS RMD requirements contained in IRS Reg 1.401(a)(9)-6. This Reg outlines the types of annuity payments that do not extend the payout period too long to qualify, but it is quite difficult to interpret and does not speficially refer to refund features.