Non Qualified Fixed annuity – non spouse inheriting
three children are inheriting a non-qualified fixed annuity from thier mother. All three are over the age 59 1/2. Do they have a five year something stretch rule? to avoid tax on gain in one year? thanks.
Permalink Submitted by Alan - IRA critic on Thu, 2020-11-19 00:25
They should have various choices depending on what the insuror offers. These choices are the 5 year rule (often the default choice), lump sum distribution, life expectancy stretch or perhaps annuitization of the entire balance. From a tax standpoint, the slower and smaller the distributions are, the less tax impact. Gains typically come out first, so most of the taxes would be due early on within the option offered or elected.