Gift from a qualified or non-qualified account?
A 79 year-old parent wants to gift money to a daughter and has both qualified and non-qualified accounts available. [u]From which type of account would it be best to gift the money?[/u] The non-qualified money is in two annuities that are past the penalty period but there would be a gain in them. The non-qualified money is in CD’s that are now up for renewal. The daughter will inherit the parent’s estate at death. [u]Also, is there any reason to keep the gift below $13k since the entire estate at death will certainly be very small, under $200k[/u]? The parent is in early stages of Alzheimer’s.
Permalink Submitted by Alan Spross on Tue, 2011-12-06 16:56
You indicated that both accounts are non qualified. The parent would have to take a NQ annuity withdrawal, and unless it is a pre 1983 annuity the earnings come out first and there would therefore be an income tax bill to pay by the parent. The CD funds could be gifted without incurring income tax.
The parent can exceed 13k if they wish, but it requires the filing of a gift tax return on Form 709. There would be no gift tax due, just the hassle of filing the 709. Since this is December, 13k could be gifted by the end of the year and another 13k gifted in January for the 2012 gift. No 709 needed.