Rule
A nonqualified deferred annuity contract owned by a non-natural person is generally not eligible for tax deferral. A common exception to this is when the contract is held for a natural person.
Tell me moreNon-natural persons, or entities, include trusts, charities and corporations.
A trust with individual beneficiaries will usually qualify for the exception mentioned above.
But the IRS has indicated that the following entities would generally not qualify for the exception.
- Corporations and partnerships
- Rabbi trusts
- Charities and trusts with charities or other entities as beneficiaries (but are generally tax exempt)
- Municipalities and other political subdivisions (but are tax exempt)
When a contract is owned by a non-natural person, the death of the annuitant will trigger a death claim on the contract. Learn more about Trusts as Annuity Beneficiaries.
The subject matter in this communication is provided with the understanding that Principal® is not rendering legal, accounting, or tax advice. You should consult with appropriate counsel or other financial professionals on all matters pertaining to legal, tax, or accounting obligations and requirements.
Call your wholesaling team with questions about annuities or contact Scott Van Wyngarden in annuity advanced markets at 515.247.6785 or VanWyngarden.Scott@principal.com.
517505-062018
