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RuleEffective Date
Cost basis stepped up to the value of contract at time of owner’s death October 21, 1979 – variable annuity contracts issued from this date on do not receive a step-up in basis at owner’s death. Any gain is taxable to the beneficiary.
Basic taxation on withdrawal (income first) August 14, 1982 – any investment made on or after that date in an annuity contract, regardless of when the contract was issued.
10% penalty on premature distributions January 18, 1985 – contracts issued after that date
Death of the holder (owner) January 18, 1985 – contracts issued thereafter
“Non-natural person” rule February 28, 1986 – contributions made after that date, regardless of when annuity was issued.
Death of “any” holder April 22, 1987 – for contracts issued after this date, death of one joint owner forces distribution even if another owner survives.
Gift of annuity April 22, 1987 – contracts issued thereafter
Multiple contracts treated as one October 21, 1988 – non-qualified contracts issued after this date by the same company to the same owner during any calendar year are treated as one contract for the purpose of determining taxable withdrawals.




Last Updated: 9/23/2012 10:05:00 PM