Penalty for not taking NQ Annuity Stretch Payouts Timely
Daughter inherited Nonqualified (“NQ”) Annuity from her mother in 2008 (before payouts began to mother). It appears the daughter filled out paperwork sometime in 2009 to receive stretch payouts, but no payments were actually made to her. In 2016, when brought to the attention of the insurance company, they calculated what they are calling RMDs for the years 2009 thru 2016 and made a payment to her.
Is there a penalty for not taking NQ annuity stretch payouts on a timely basis? If so, who assesses and collects the penalty? Who is responsible for paying the penalty?
Permalink Submitted by Alan - IRA critic on Fri, 2017-10-13 01:06
NQ annuity beneficiary distribution requirements are spelled out in Sec 72(s), and 2009 RMD distributions were not waived as they were for qualified plans. IRS Sec 4974 excess accumulation penalties do not apply to NQ annuities, so there will be no IRS penalties. I doubt that the insurance company will levy any penalty since they are probably responsible for the not making the required distributions when they should have.