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Missing Cost Basis
Old 02-15-2016, 06:35 AM   #1
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Missing Cost Basis

I just inherited a non spousal anunity along with my brother. Its held by Hartford and it's quite old and has changed hands more than once. No one can determine the cost basis. What happens in a case like this? How would the distribution be taxed? Who's responsible and do I do I run the risk of the entire distribution be counted as ordinary income?
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Old 02-15-2016, 07:07 AM   #2
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Was researching inherited annuity this weekend. You either take a lump sum, or distribute over 5 years.

I am surprised the insurance company doesn't know how much was paid for the annuity. Has Hartford always held the contract? Or did it start with a different company?

From what I read, the company issues a 1099-R to you, and it will show the earnings (the amount you pay taxes on).
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Old 02-15-2016, 08:17 AM   #3
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Can you locate the 1099Rs from previous yrs? That would show you the total distribution and the taxable portion as target2019 said.
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Old 02-15-2016, 09:34 AM   #4
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Quote:
Originally Posted by target2019 View Post
Was researching inherited annuity this weekend. You either take a lump sum, or distribute over 5 years.
If annuity payments have not yet begun an inheritor typically also has the option to spread payments over his/her lifespan.

To reflect payments you will receive a 1099-R, and for tax purposes the income is treated much like that of a traditional IRA withdrawal. Some states treat annuity payments the same as pension payments, which may qualify the payments for some state income tax relief.
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Old 02-15-2016, 02:03 PM   #5
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Quote:
Originally Posted by GrayHare View Post
If annuity payments have not yet begun an inheritor typically also has the option to spread payments over his/her lifespan.

To reflect payments you will receive a 1099-R, and for tax purposes the income is treated much like that of a traditional IRA withdrawal. Some states treat annuity payments the same as pension payments, which may qualify the payments for some state income tax relief.
That all sounds like what I read (and didn't retain very well.) I thought what I saw was to the effect that there are different options for spouse vs. non spouse beneficiary. I'll just post the article I read.

Helping an Annuity Beneficiary Understand Distribution Options: An Overview of the Nonqualified Annuity Stretch Concept
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