Transferring annuity proceeds to IRA

[MAnnuity]

"The funds in the annuity do not perform as well as those in the IRA but on the other hand, I am guaranteed $25,000 per year until death at which time, whatever remains goes to my wife as an insurance death benefit."

Also not a tax pro but generally speaking, an annuity death benefit is taxed differently than an insurance death benefit. I encourage you to get clarification from a professional regarding the tax liability that your wife would potentially be subject to in the event you passed away while the annuity still has cash value.

 

[DoctorDu]

MAnnuity is correct. The death benefit under an annuity contract is taxable to the extent the proceeds exceed the tax basis (premium less basis recovered as tax free portion of each annuity distribution). Unlike capital assets such as mutual funds, annuities are considered "income in respect of a decedent" and do not get a fresh basis at triggering death.