2 Tier annuity can surviving spouse transfer to IRA in her name
Old 2 tier annuity requires forced annuitization of death benefit over 5 years or longer. Surviving spouse wants to transfer annuitization payments to IRA in her name. Husband was only taking RMD’s each year. Insurance company says she can’t do this as IRS changed law in 2014. I can’t find code supporting this. I don’t trust insurance company, anyone know?
Permalink Submitted by Alan - IRA critic on Wed, 2024-06-12 18:26
I don’t know which law they are referring to, but if it’s Announcement 2014-32 that limits 60 day rollovers to one for all IRA accounts, that Announcement would not make a difference because all it did was change the one rollover limit to all IRAs instead of just per IRA account, so either way it would be limited to one for this IRA annuity. But this might be a moot point because each distribution would include a beneficiary RMD and these are never eligible for rollover.
This could be avoided if the insurance company would agree to direct transfers to her own IRA as these are unlimited in number and do not affect RMDs. However, I am not aware of any insurance companies that offer direct transfers from an annuitized account.
Hopefully, this can be annuitized for longer than 5 years. If not, the surviving spouse will get hit with a major downside for this product.