Tax Facts

623 / If an individual purchases a deferred or retirement annuity and dies before the contract matures, is the death value of the contract includable in his or her estate?

Generally, yes.

The amount payable on death before maturity is not life insurance and, therefore, the estate tax rules for annuities apply.

If a death benefit is payable to an annuitant’s estate, its value is includable in the gross estate under IRC Section 2033, and it is considered to be a property interest owned by the annuitant at the time of death.

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