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Subject:  Re: Term Certain Annuitization - Inherited Annui Date:  9/20/2012  11:58 PM
Author:  BaumgrenzeJohn Number:  116646 of 127642

Thank you Phil,

No, my searching sent me to Pub 939 which made no sense to me. On quick reading, it seems only to apply to life annuitizations, (based on the examples) not term-certain ones elected by beneficiaries.

I've downloaded Pub 575 and it says that the General Rule (393) must be used for nonqualified annuities. Catch 22, or so it seems to me.

I am asking about a beneficiary annuitizing a share of two sizeable annuities, both non-qualified, both started (the investment was made) before 11/18/96. On average they are 63% taxable and 37% invested capital. The payout is envisioned as a 5 year term-certain. I think that is an approach that makes sense for a beneficiary who wants to spread the taxes over more than one year and to leave any residue to a beneficiary. (A 10 year payout is also offered.) The term-certain illustrations (subject to change on application) project an average of ~0.3%/year, so they are 'better than money in the bank.'

I'm not privy to the tax status of the beneficiaries, two are retired and over 70.5 and two are 40ish and still earning. This exercise does not impact my income/taxes; I'm just trying to be a good brother and father.

I'd appreciate any insights you can offer.

Thanks again for your patience.

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