Annuity
Father dies and has his only son as primary beneficiary This is a non qualified annuity. Cost basis is 30k with a current value of 130k
Would the son pay inheritance tax only
Father dies and has his only son as primary beneficiary This is a non qualified annuity. Cost basis is 30k with a current value of 130k
Would the son pay inheritance tax only
Permalink Submitted by mk foss on Wed, 2014-02-12 03:28
A non-qualified annuity generates ordinary income subject to tax at the individual’s highest rate. Also the basis is recovered last. So if he took out $90,000 it would all be taxable because the basis is reserved for the last dollars removed. Depending on the other assets and where you live there could be estate tax (federal) or inheritance tax (state) as well. The income may also be subject to the 3.8% net investment income tax.