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Transfer of ownership of annuity--tax considerations

Hi Community. I am the Trustee of a Trust, which now holds just one asset, a deferred annuity for which the Annuitant is the Beneficiary of the Trust. I'm about to annuitize, after which the annuity will pay the Beneficiary periodically, with the Beneficiary as Payee. So going forward, the Trust could remain the owner of the annuity contract, and file a 1041 and issue a K-1 each year. The annuity is life-only so there will never be payments to a secondary beneficiary, and the Trust won't see any cash flow in or out. But it seems to me the Trust will have outlived its usefulness as there will no longer be any decisions to be made or assets to buy or sell. So I'd like to transfer ownership of the annuity contract from the Trust to the Beneficiary, then end the Trust. The annuity issuer (a life insurance company) says this is possible by completing a form, but that form has the following warning: 

 

"Certain ownership transfers may represent a taxable event under current federal tax law (see e.g., IRC Sections 72(e)(4)(C), 72(g), 83, and 2501). This may include a transfer of an annuity contract without adequate consideration (a “gratuitous transfer”). However, there are exceptions that may apply to your situation. We recommend you seek the advice of your tax and/or legal counsel prior to requesting any ownership change."

 

I've read those sections and I don't see how they would apply in this situation. Can anyone help me understand the tax ramifications of such an ownership transfer?

 

Much appreciated.

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