IRS Clarifies Inherited Annuities

IRS Clarifies Inherited Annuities

When a loved one passes, financial decisions can feel overwhelming—especially when retirement accounts are involved. Thankfully, the IRS has recently helped simplify one important issue for surviving spouses: how **individual retirement annuities (IRAs with annuities)** are treated when inherited.

### ✅ IRS Aligns Annuity IRAs with Traditional IRAs for Spousal Transfers

The IRS has **confirmed that its rules for passing on an individual retirement annuity** (like a variable or fixed annuity held in an IRA) **are the same** as the rules for passing on a traditional **individual retirement account (IRA)** that holds mutual funds, stocks, or other non-annuity investments.

This is **good news** for surviving spouses. Why?

Because it means more **consistency**, **flexibility**, and **tax advantages**.

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### 📘 What Does This Mean?

If you’re a **surviving spouse**, and your deceased spouse had an **IRA annuity**, you can now:

* **Treat the inherited annuity IRA as your own IRA**
* **Defer required minimum distributions (RMDs)** until you reach age 73
* **Avoid immediate taxation** of the annuity’s value
* **Preserve the tax-deferred growth** of the annuity

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### 💡 Example: IRA vs. Annuity in Practice

Let’s say your spouse passed away and left you:

* Option A: A Traditional IRA with mutual funds
* Option B: An IRA holding a fixed annuity

Under the IRS’s clarification, **you can now treat both options the same**. You can move the annuity into your own IRA and delay RMDs—giving you more control over the income timing and potentially saving on taxes.

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### 📌 Why This IRS Clarification Matters

* 🧾 **Simplifies estate planning** for married couples
* 💰 **Preserves tax-advantaged growth** for annuities
* 📉 **Avoids premature taxation** on inherited annuity IRAs
* 📆 **Aligns all IRA types** for smoother spousal rollovers

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### 🚨 Key Considerations

While the IRS has clarified its position, each case still depends on the **annuity contract**, the **age of the spouse**, and how the **beneficiary designation** is worded. It’s important to review the annuity agreement and work with a fiduciary advisor to avoid unintended tax consequences.

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### 🤝 Let Mintco Financial Help

At **Mintco Financial**, we help couples and individuals across the U.S. navigate the rules of **IRA inheritance, annuity planning, and spousal rollovers**—so you can make confident, tax-efficient decisions during challenging times.

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### 📞 Talk to an Advisor Who Understands IRA Transfers