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Question for the Money Doctors

Question submitted on Jan 31, 2012.


My 88 yr old father transferred ownership of 3 tax deferred annuities that he does not need to me in 2011. He remains as annuitant. There have never been any withdrawals or dispersements. He understands that he will pay income tax on the earned interest due to the ownership transfer. What are the tax consequence for me? I received a 1099R, copy C as recipient of the annuities. Does gift tax apply if he is still annuitant?


I am surprised that you received a Form 1099R. Given the circumstances that you described, your father should have been the one to receive the Form 1099R. He is the one that would be required to pay the income tax on the gains in the policy from the date he acquired the annuity until the date of transfer if the annuity is not an IRA or a qualified plan. (If the annuity was in an IRA or qualified plan, all of the transfer would likely be taxable income to your father.)

There was a taxable transfer for gift tax purposes. If the annuities and other gifts made to you during the year totaled more than $13,000, a gift tax return should be filed. Your father has a $5,000,000 lifetime gift tax exclusion, so it is unlikely that any gift tax would have to be paid.

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