if an Annuity's owner die, is the death benefit income tax free?

Answer 1

It all depends. If the owner is the sole owner, then it goes to the estate. The estate may be taxed if it is at or above the federal estate tax limits. State taxes may also apply.

If a beneficiary/beneficiaries are named, then the account would pass to them. They would not incur taxes on acquiring the account but may incur taxes on income it generates.

I hope this helps. I wish I knew a little more so I could help you more. Good luck!

Answer 2

Read the annuity contract. Generally, most withdrawals from annuities are taxed. This is true if the owner withdraws the funds or the beneficiary after the owner's death withdraws the money. SOME annuities have an insurance benefit. That benefit may be tax free. Read the contract.

If you still have questions, consult a financial professional - accountant, lawyer or insurance agent.

Good Luck.

Answer 3

No it is not. If it is a qualified annuity, such as an IRA or 403B then there is tax due on the entire amount because no income tax was ever paid on this. It would be taxed at what ever income tax bracket the beneficiary is in the year they receive it. If it is non qualified then the only tax is on the growth over what was originally put into it. IE it is now 100k but only 50k was invested, the beneficiary would pay tax on the 50k. This is usually taxed as capital gains not income tax. Finally if it is qualified then the beneficiary can request to receive the money not in lump sum but as a lifetime income. This is what is called a stretch IRA. This allows the beneficiary to receive more of the proceeds without paying a lump sum amount of tax.

Answer 4

No. It isnt an insurance policy

Answer 5

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