Annuity Title
If individual owns non qualified annuity and changes ownership to a Trust does that create a taxable event for the gains?
If individual owns non qualified annuity and changes ownership to a Trust does that create a taxable event for the gains?
Permalink Submitted by Alan - IRA critic on Sat, 2021-04-10 01:37
What kind of trust is the annuity being transferred to, and who are the trust beneficiaries?
Permalink Submitted by Don Warnke on Sat, 2021-04-10 14:51
it is an irrevocable trust, the current owners children are the beneficiaries of the trust.
Permalink Submitted by Alan - IRA critic on Sat, 2021-04-10 17:39
This appears to be a taxable event per the following copied from Michael Kitces blog:
“The reason annuity transfers are more complicated is not IRC Section 72(u) – pertaining to the ongoing tax-deferral treatment of an annuity – but instead IRC Section 72(e)(4)(C), which controls whether a transfer itself can be done without triggering the recognition any embedded gain on an annuity, and was created to prevent individuals from shifting the unrealized gains of an annuity to another person through gifting. Under this section of the tax code, if “an individual who holds an annuity contract transfers it without full and adequate consideration” any gains are recognized when the transfer occurs; in other words, the tax code treats it as though the contract was liquidated in a taxable event, and the proceeds were then transferred to purchase a brand new annuity.”