72 Q

L1: 72 Qi HAVE A CLENT WHO HUSBANDS DIES IN January 2010, she has several non-qualified annuites of which she is the beneficiary as the spouse. in ready 2010 tax facts, question 36. it states that she has to make an election within 60 days or the annuities gain is taxable. i was going to elect a 72q as she is only 51 years old and needs income from some of these annuities. would like to know if the law changed for 2010 on 72q or if she would still beable to elect 72q.2010-04-29 14:42, By: cindy, IP: [98.243.197.63]
L2: 72 QCindy:You didn’t specify but I’ll assume these Non-qualified annuities are still”Deferred Annuities” and not true “Annuities,” either SPIA or “Annuitized Deferred Annuities.” Please clarify.I will assume they are still “Deferred Annuities.” If this is the case then thebeneficiary can begin distributions and not worry about 72(q) since death distributions are not subject to the 10% Early Withdrawal Penalty. Talk with the annuity company and they will help you set them up as “Beneficiary Annuities.”Jim2010-04-29 15:04, By: Jim, IP: [70.167.81.119]

L3: 72 Qthese are non qualified annuities that that the husband had my client is the benefiicary no distributions have been made nor has the spouse settled the death claim as of now. my advisor tells me that she had to make an election with 60 days of the death of her spouse for the gain not to be recognized. siting 2010 tax facts question 36. so even if you takes the annuities over in her name is there a taxable event because he passed in jan of 2010?2010-04-29 15:19, By: cindy, IP: [98.243.197.63]

L4: 72 QOne of the CPA’s may want to comment on your question, but this forum is not really the place for getting tax advice. You mightseek out competent tax advice in your case from a local CPA or tax attorney.Jim2010-04-29 15:27, By: Jim, IP: [70.167.81.119]

L5: 72 QJim’s advice is the best advice. I would look at the specific contracts and documents before advising anyone on annuities of any kind. The dates, terms and conditions, contract wording, type of investments, cost, value at death, etc. are all factors that have to be considered.In your case, a key aspect would be how much gain is involved between the amount invested vs the value. I’m not sure if the Annuity usually gets a “step up in basis” to fair market value as of date of death. If so, then there would be no taxable gain to the surviving spouse. HOWEVER, as of now, Estate taxation in 2010 is in limbo, waiting for Congress to resolve the issue. Under current law, deaths in 2010 are not subject to any estate tax. BUT, these means that there is no “step up in basis” either. That would mean that the cost basis would be the initial cost to the decedent. There is speculation that Congress when it gets around to it will provide taxpayers with a choice of using either of the 2 systems.In any case, you are already past the 60 days, so forget that aspect.As Jim mentioned, talk to a qualified estate accountant or attorney.2010-04-29 15:56, By: dlzallestaxes, IP: [173.49.30.37]

L5: 72 QAfter re-reading your last comment, especially your last sentence … statement … I’ll add the following comment:”so even if you takes the annuities over in her name is there a taxable event because he passed in jan of 2010?”It appears you do not have a good understanding of “death benefits for beneficiaries” as it applies to annuities. This is a very complicated issue and can lead to a serious, negativefinancial impact on your client, which could lead to you and your companybeing held liable for financial loss.A spousal beneficiaryhas two options: 1) Assume ownership of the annuity in their own name or 2) establish “beneficiary” ownership. Each of these situations has significant positive benefits as well as negative impacts.My suggestion againis for you to seek out guidance from your supervisors in the matter of settling death claims and the impact of giving the wrong guidance to a beneficiary. Part of your best guidancewill come froma local CPA or tax attorney knowledgeable in these matters, as I have previously stated.Jim2010-04-29 16:05, By: Jim, IP: [70.167.81.119]