For any annuity contract issued after April 22, 1987, it must terminate upon the death
of any owner and benefits will then be paid to the designated beneficiary. The death of any owner will trigger the termination of the annuity contract even when the contract is owned by a number of individuals – husband and wife. See Internal Revenue Code (“IRC”) § 72(s)(1). However, when a non-natural person owns an annuity contract, then the primary annuitant will be treated as the owner and the contract will terminate upon the death of the annuitant. See IRC § 72(s)(6).
If the death occurs before the annuity starting date (also known as annuitization),
then a beneficiary must receive the entire interest within five years of the date of death of the owner. Satisfying the five-year requirement does not mean that payments must be received during this time. Click here to read more.
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