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According to the Annuity Expert Advise Website, you do have some options.
Here are 4 options on receiving your Annuity inheritance-
- Lump-Sum Distribution: Beneficiary gets the remaining annuity's value in one payment, a lump-sum
- Nonqualified-Stretch Provision: Allows beneficiaries the payments they are entitled to based on their life expectancy.
- Five-Year Rule: The beneficiary has five years to take out the proceeds. It can be taken out gradually or in a single lump-sum anytime, as long as they withdraw the death benefits within five years of the annuitant's death.
- Spousal Continuance: Spouses can be the new owner and annuitant of the deceased's annuity and continue the contract.
The taxability of the annuity is determined if the annuity is qualified or non-qualified.
- Qualified annuities will require those who inherit them to pay taxes on all withdrawals and if applicable, take a Required Minimum distribution (RMD's), and is taxed at the inheritor's regular tax rate.
- Non Qualified annuities are only taxes on the earnings and are not required to take RMD's.
See this article for more information.
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