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February 21, 2020
Question

If beneficiary of a non-qualified annuity, took a lump sum distribution due to the 5 year average before turning 59 1/2 are there exceptions that would reduce taxes?

  • February 21, 2020
  • 1 reply
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1 reply

February 29, 2020

The beneficiary should not have to pay additional penalty.  A nonqualified annuity does not provide a step-up in cost basis at death, and the deferred earnings will be taxable as ordinary income to a non-spousal beneficiary.