Question:
WHEN I DIE AND I LEAVE MY ANNUITY TO MY DEPENDANT ARE THEY TAXED OR IS IT TAX FREE.
Answer:
Brian, We are not sure what you mean by annuity - a Retirement Annuity fund, a Guaranteed Annuity or a Living Annuity. The retirement annuity is paid to your dependents by the trustees - it will be taxed per the withdrawal lump sum tax table if they choose to receive a lump sum and per the income tax table if they choose to receive a regular monthly income. The guaranteed annuity dies with you unless it includes a spousal benefit - the spouse is taxed on the income. The living annuity goes to your nominated beneficiaries, and is taxed as the retirement annuity death benefit, ie as a lump sum if the beneficiaries choose the lump sum, and as income if they choose to receive a monthly income.
