|Avoid Annuity Tax Problems
Millions of investors own retirement annuity
accounts but few are aware of the tax implications when the annuity is passed
to an heir or beneficiary.
A little known tax fact is that income tax
on an individually owned annuity can be postponed only if the account owner's
spouse is named as the sole beneficiary. If the annuitant is not married, the
same treatment may be obtained through the use of a trust account.
other designation of the account beneficiary will cause the proceeds to be
immediately taxable in the year of the account owner's death. The results can
be financially devastating, triggering huge current tax liabilities that would
have otherwise been avoided.
Most beneficiary designations are made at
the time that the annuity account is opened, often without the advise of a
professional tax adviser. The investment representatives who typically open
these annuity accounts give the blanket recommendation to investors to "seek
advise from your own tax adviser" but few investors ever bother to seek
separate tax advice.
Investors often assume that the financial planner
opening the annuity account is incorporating tax advice into the service
provided, but usually this is not the case. By the time the tax problem is
discovered by the executor or the estate, it is too late to make any
Written by Tony Novak
Tony Novak is an
independent writer and financial adviser in Narberth PA who provides
OnlineAdviser services through MedSave.com and FreedomBenefits.org
Tax Shelters - KMPG Goes Down Hard
In the largest criminal tax case ever filed,
KMPG has copped a plea to using fraudulent tax shelters to bilk the government
out of 2.5 billion dollars. KMPG has agreed to pay a fine of $456 million
"It's How Much You Keep That Counts! Not How Much
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