<p>My husband's aunt passed away in Oct. 2012. We just found out he is the beneficiary of an annuity (through MetLife). We have some options for how to handle the $, but aren't sure which one will be best for fin aid and tax reporting. My daughter attends a CSS Profile school. If anyone has suggestions, I'd love to hear them.
-Single Payment, Lump Sum Distribution
-Beneficiary Continuance (leave in an annuity contract up to 5 years)<it is="" currently="" earning="" 5%="">
-Annuity Payments (stream of perioic annuity payments
-Direct Transfer to a Decedent IRA or establish an Inherited Non-Qualified Annuity (I have no idea what these are!)
It would be great to know how this would be reported on the CSS Profile and Fafsa forms, too!
Thank you!</it></p>
<p>If it is an inherited IRA, the principal would be classified as retirement funds, and the required annual minimum withdrawals would be income. But the requirement would be based on your husband’s age and so might not be all that much money.</p>
<p>But it might be worth your time to ask your child’s school what they would make of these various options.</p>
<p>Actually, it does not mention that it IS an IRA. It states that he is an ‘annuity beneficiary’. The only mention of IRA is if HE wants to transfer it to a ‘Decedent IRA’…which I don’t really know what that is. If he takes any distribution, I’m thinking it would have to be listed as ‘other taxable income’ PI-125. But if he puts off the distribution for 5 years, maybe it would be listed only as an asset, maybe in PA-120? These are just some guesses, but I’d love it if someone with exerience with this could confirm. And another thing… he has not filled out the paperwork yet on how he wants to handle this. Whose money is this right now, at the time of filing the CSS Profile? Does it need to be reported on the current Profile if he has not done this?</p>
<p>hmmm… this IS an interesting one. I’m very familiar with annuity beneficiary payment options but you’d need to provide more info to get accurate advice here. First off, there are qualified/IRA type annuities which would be pre-tax and thus all distributions would be taxable income. There are non-qualified annuities also - funded with after tax money so only the GAINS are taxed - your aunt may have already taken distributions of the gains, who knows. At any rate, for non-ira annuities once you get down to the original principal, your distributions are return of premium, not taxable income. You need to know what type of annuity this is.</p>
<p>Now, is this your asset before you file the beneficiary clain forms? Wow, that’s a great question. I’d say no, it is NOT yours yet. It WILL be, but that would be reflected next year if you file FAFSA/ CSS prior to claiming it. DISCLAIMER : I have no idea if this is correct, so don’t take it as advice, I just can’t see how they can say it was your asset when it is in no way titled to you currently. </p>
<p>I’ll be interested to see how this thread plays out.</p>
<p>One more little bit of info…on the form for h needs to use to decide how he wants to handle the $, there is an option to" establish an Inherited Non-Qualified Annuity" BUT in fne print, this option is NOT available for this particular account. I don’t know if that helps in knowing what type of account it is. I think our next step will to make an appt. with a rep from MetLife to gather more information! Thank you!</p>