IRA Annuity Trustee Transfer
If an IRA Annuity has a single owner (Husand) but a joint annuitant which is his spouse, can you trustee transfer that IRA to another IRA Annuity in which the husband is the sole owner and sole annuitant without it being a taxable event. I know with 1035X of a Non-qualified annuity it would have to be like titling and annuitants. Does it work the same or differently for an IRA?
Secondly, if we decide to remove the spouse as the joint annuitant of the IRA annuity before transferring to the new IRA annuity, would that be a taxable event?
Permalink Submitted by Alan - IRA critic on Fri, 2025-05-30 19:01
A change of annuitant to the individual IRA owner should not be taxable event, whether done at the current insurance company or the new one. However, it would be best to check with the new company to determine if this is best done before the direct transfer, at the time of the transfer, or after the transfer.
Permalink Submitted by Anthony Capristo on Sun, 2025-06-01 07:56
It turns out I cannot remove the annuitant at the current annuity company. If I trustee transfer the IRA annuity with joint annuitants to a brokerage account IRA, which would have no annuitants, would that cause a tax issue or would it defer the taxes?
I am realizing, very few annuity carriers allow joint annuitants on an IRA so I am looking for a work around to move the funds and defer the taxes. Thank you for your help Alan!
Permalink Submitted by Alan - IRA critic on Sun, 2025-06-01 22:33
Is this annuity in payout, and if so are the payments treated as RMDs?
Permalink Submitted by Anthony Capristo on Mon, 2025-06-02 09:39
No payout yet, no RMD. Its a fixed annuity, with a spousal income rider which can be turned on in the future which is why a joint annuitant was allowed. That’s my understanding.
Permalink Submitted by Alan - IRA critic on Mon, 2025-06-02 23:20
OK, not being very familiar with annuity exchanges, I am guessing here. The existing annuity premium was paid to the current insurance company and reflects the structure of the annuity including fringe benefits and definitely the annuitant structure. Any change of annuitant or other conditions, would require a premium adjustment and the initial insurer will only transfer the portion of the premium that reflects the obligations that the insurer will no longer have to pay. The new company cannot collect the difference because IRA contributions are limited and may already have been made. And any distribution out of the IRA will be taxable in the event that the new structure represents a less expensive annuity structure.
So my guess is that the current IRA annuity will probably have to be surrendered whether surrender fees still remain or not. The IRA owner probably will have to accept a distribution which will be fully taxable unless rolled over within 60 days, and the IRA owner also needs to have a rollover available under the one rollover per 12 month limit. The owner can then purchase a new annuity with the annuitant and other fringe benefit structure they want, and if it costs more will have to sell other IRA investments and transfer the needed funds to the new insurance company to pay the premium for the new IRA annuity.
I could be wrong, so it would be a good idea to ask the proposed new annuity provider if there is any solution other than surrender and repurchase.