Trust owned non qualified annuities

Submitted by Mark Rowlette on Tue, 2008-10-07 14:07

Can someone clarify the rules, which I think have changed.

Non Qualified Annuity

Trust is the Owner
Person is Annuitant

Annuity is owner driven

Are pre 591/2 withdrawals subject to 10% penalty?

Thanks



Submitted by Al Fry on Tue, 2008-10-07 21:38

If it is a revocable living trust, or a grantor trust (normally using grantor’s SSN), then you are correct. If the trust is a non-grantor irrevocable trust, then distrubutions are always subject to the 10% penalty. The only exceptions are: (a) death of annuitant; or (2) a SPIA. The age exception is based on the contract owner, not the annuitant (IRC Sec. 72(q)).



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