- Lump-sum payment
- Annuitization
- Five-year deferral
- NQ stretch
Lump sum election –
- Distribution of contract value: $248,000
- $110,000 gain*: ($25,505)
- Net after-tax benefit: $222,495
Five-year deferral –
- Entire amount must be distributed before the fifth anniversary of date of owner’s death
- Partial withdrawals or a full withdrawal permitted
NQ stretch –
- Distributions taken over life or a period not longer than their life expectancy
- Distributions must be taken at least annually
- First distribution must begin within one year of owner’s death
- No regulations under Section 72(s) • Only private letter rulings
- PLR 200303016 – outlined three methods for satisfying requirements: 1) RMD calculation method 2) Amortization calculation method 3) Annuitization method
- PLR 201330016 – permitted a non-spousal beneficiary to do a 1035 exchange of one inherited NQ deferred annuity for another one