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When an heir inherits an IRA (or annuity), s/he also inherits the IRA's basis. There is no step up in basis, but it does not become completely taxable.

When an heir inherits a taxable account, the new basis becomes the value on the day of death.

So if you have a lot of unrealized capital gains in your taxable accounts, it's better to spend down your tax-deferred accounts first, and avoid selling your stocks/funds so that your heirs get the tax benefit.

You need to do a what-if analysis for how much your heirs get if you die in 2010, 2015, 2020, etc. This is complicated by the tax law situation: the tax laws are certainly going to change from what they are now.

Rather than withdrawing your annuity, it may be better to do an exchange into a low-fee annuity provider, such as Vanguard, TIAA-CREF, Berkshire, or maybe T Rowe Price. I like your idea of depleting the traditional IRA before you rollover your 401(k) into an IRA.
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