Inherited non-qualified annuity

[TJK64]

I inherited a non-qualified annuity from a deceased parent. Do any withdraws I make incur the 10% IRS penalty for withdraws before 59 years of age. Everything I researched says no since this is an inherited non-qualified annuity but wanted to make sure.

Also, I chose the "non-qualified stretch" as the method of distributions moving forward. On any given year, am I able to withdraw more than the calculated amount based on my life expectancy if I need to withdraw more? 

[Mike9241]

The stretch payment is the annual minimum amount of money that must be withdrawn for compliance with the Internal Revenue Code. You can withdraw more without a tax penalty but it is subject to regular income taxes and could affect other things.  you have to ask the annuity company if they allow withdrawing more. 

[TJK64]

Thanks Mike9241

Also, there should not be 10% penalty for withdrawals even if I do a 1035 exchange from the original annuity to a more favorable annuity as long as the "inherited non-qualified" status transfers over?

...which it should correct?

[Critter-3]

The payer should code this a 4 in box 7 of the 1099-R form that is issued each January ... code 4 means this was inherited and no penalty is required.