2 Annuities-Federal & State Taxes

[j.quest]

What is the name of your state (only U.S. law)? Iowa

My dad died 6 years ago and my mom passed 4 weeks ago. My sister and I were named beneficiaries on her two annuities that she had. Mom's lawyer told us to talk to a tax consultant to see what federal and state tax liabilities there will be if we cash the annuities in.

As of right now we would like to go ahead and reinvest the money instead of cashing out. If we did decide to cash out how would the annuities be treated as far as federal and state income tax is concerned? Thanks for your help.

 

[anteater]

Without more information about the type of annuities, it really is not possible to hazard a guess. About all that can be said is that the taxability will be the same for you and your sister as it would have been if your mother were taking distributions from the annuities.

And, if the distributions are subject to income tax, they will be ordinary income.

 

[Betty]

Agree with anteater re taxes. We can't give a more thorough answer based on limited information. It seems the lawyer even told you to talk to a tax consultant.

 

[j.quest]

Will be seeing one on Monday. Will let you know what I find out.