Co annuitants on an immediate inherited annuity
Could you please clarify for me whether there can be co annuitants on an owner driven annuity contract which is a fixed single premium annuity that has been inherited. I believe the answer is no, but I am not certain. It seems clear that the single life table used for the calculation might mean that co annuitants would have a combined life expectancy which would be less than the required minimum in this scenario.
Permalink Submitted by Alan - IRA critic on Thu, 2014-05-15 00:04
You are probably right, but the answer must oome from each insurer. There are no IRS Regs for NQ annuities in this respect and state law may also factor in to what an insurer can offer in different states.
Permalink Submitted by shelley kosrunek on Thu, 2014-05-15 02:18
That it is a qualified ira annuity that was inherited. The bene owner wishes to add his wife as co annuitant
Permalink Submitted by Alan - IRA critic on Thu, 2014-05-15 03:41
There are IRS Regs for RMDs from DB plans and qualified annuities including IRAs. http://www.gpo.gov/fdsys/pkg/FR-2004-06-15/pdf/04-13475.pdf#page=6. These Regs are complex and highly technical while still failing to address many facets of annuity RMDs. While a joint annuitant can somewhat reduce RMDs for IRA annuity owners, adding a joint annuitant to a beneficiary IRA will not change the RMD which is based solely on the beneficiary, but annuitizing might reduce RMDs somewhat even if only based on the beneficiary’s single life expectancy. Therefore, the beneficiary might check with the insurer to determine if the insurer will offer the option or whether the beneficiary should just take his RMDs and name his spouse as successor beneficiary. The bulk of the above Reg is dedicated to eliminating annuity structures that decrease RMDs below those required using the age of the owner or beneficiary. All this said, the rules are so complex that if the insurer offers a certain annuity structure, it is highly unlikely that the IRS will question it.
Permalink Submitted by shelley kosrunek on Thu, 2014-05-15 14:10
These regs are helpful but I am not sure they apply to an inherited ira, it’s seems specific in pub 590 that they don’t…..
Permalink Submitted by Alan - IRA critic on Thu, 2014-05-15 17:32
They apply, but simply fail to address many issues. The IRS is equally concerned that beneficiaries distribute the accounts fast enough as well as owners. But the Regs fail to address questions such as annuities that mature in a period shorter than life expectancy, etc. What page are you looking at in Pub 590?
Permalink Submitted by shelley kosrunek on Thu, 2014-05-15 17:44
I understand and appreciate your help