VStrom
New Poster
Cash: $ 0.45
Posts: 2
Joined: 31 Jan 2006
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| Annuity Question |
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Hello,
I am brand new here and surfed onto the site as I am looking for the answer to a question.
Here is my dilema.
My Mom has an anuuity worth 20K.
In 2005 she added me as a co-owner.
Now she has received a 1099 form for 10K.
So, she (we) are being taxed on 10 grand just because she added my name to the account.
We did not take any money out of the account.
We asked the bank and they stated Yes and ownership change is a "Taxable Event"
Is this correct?
Is there any way around this?
Is there anything I can do to not have to pay tax on the 10 K
Thank You,
I will continue to read items on the forum.
Looks like a great place to learn some things.
Thanks
Chris
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Tue Jan 31, 2006 5:18 pm |
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efflandt
Senior Member
Cash: $ 80.45
Posts: 401
Joined: 25 Apr 2005
Location: Elgin, IL USA
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The only thing I could easily find about transferring an annuity to another person is http://www.irs.gov/publications/p575/ar02.html#d0e2532
It appears that unless your mother is your wife, transferring an annuity to a non-spouse is a taxable event. The $10k from her to you is not the problem (she could give you $11k/yr with no tax liability). The problem is that the money is in a tax sheltered account, which has special rules. It probably would have been better if she simply named you as beneficiary where it would have been covered by estate exemptions (unless it was a lifetime annuity being paid out).
On a related note, if you inherit a 401k or IRA do not roll it over to your own name, or it may become immediately taxable (unless it is a Roth). It must remain with a trustee for benefit of (fbo) the name of the deceased to remain tax sheltered until withdrawn.
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Wed Feb 01, 2006 2:50 am |
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VStrom
New Poster
Cash: $ 0.45
Posts: 2
Joined: 31 Jan 2006
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Thanks for the responses... I will keep researching..
I think we made a decision without knowing all the details first..
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Wed Feb 01, 2006 9:16 pm |
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