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Article Date:
September 2013

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Mom Dies: Daughter Inherits and Fixes Five Inferior Annuities

IRS private letter ruling 201330016 shows how an heir (who is not a surviving spouse) can use a Section 1035 tax-free exchange to upgrade her inherited annuities.1


The Inheritance


Mom invested in five annuity contracts of which four were fixed annuities issued by Able Company and one was a variable annuity issued by Baker Company. She named Sally, her daughter, as the beneficiary of the annuities.


Mom dies. Sally now owns the annuities. To avoid immediate taxation, she elects under Section 72(s)(2) to receive the distributions over her life expectancy.2 That’s ... Log in to view full article.

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