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Annuities do not receive a step-up in basis upon the death of the owner. Distributions from the deferred annuity to the beneficiary will be taxable as ordinary income to the same extent that they would have been taxable if they had been distributed to the owner. With a lump-sum distribution, the taxable amount will be the amount distributed that is in excess of the amount of premiums paid into the deferred annuity.
Annuities do not receive a step-up in basis upon the death of the owner. Distributions from the deferred annuity to the beneficiary will be taxable as ordinary income to the same extent that they would have been taxable if they had been distributed to the owner. With a lump-sum distribution, the taxable amount will be the amount distributed that is in excess of the amount of premiums paid into the deferred annuity.
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