Inherited nonspouse NQ annuity-penalty for not taking timely WD
Son inherited NQ annuity from his father (before payments began) about 6 years ago. Awaiting paperwork to confirm that the son did a 1035 exchange and to determine what payout method may have been elected at that time. The son indicates he has not yet received any payments from this annuity. Appears that he should have received some payment by now regardless of the payout method elected. What are the penalties for failure to take the distribution(s) on a timely basis and how are they reported? Thanks.
Permalink Submitted by Alan - IRA critic on Wed, 2016-10-05 00:22
A NQ annuity whether owned or inherited is not subject to the usual RMD rules. The insurance company may offer more than one distribution option, and may or may not send the beneficiary reminders of those options. Any penalty for late distributions would be levied by the insurance company, not by the IRS.