Inherited Accounts Guide

Axonic Insurance Now Accepts Eligible Inherited Accounts for Spouse and Non-Spouse Beneficiaries

Axonic Insurance accepts the following inherited account types for eligible beneficiaries:

• Inherited IRAs (including certain non-spouse beneficiaries)
• Stretch IRAs (where permitted under IRS rules)
• Inherited non-qualified Annuities

What Is an Inherited IRA?

An inherited IRA is a retirement account that passes to a beneficiary after the death of the original account owner.

Beneficiaries may include:

• Surviving Spouses
• Adult children
• Other family members
• Non-related individuals
• Trusts, estates, and charities

What Options Are Available to Spouse Beneficiaries?

Surviving Spouses generally have the most flexibility and may:

• Roll the inherited IRA into their own IRA
• Treat the inherited IRA as their own account - known as "Spousal Continuance"
• Delay required distributions based on their own retirement timeline

What Options Are Available to Non-Spouse Beneficiaries?

Non-spouse beneficiaries cannot roll an inherited IRA into their own IRA. Instead, the account must remain titled as an inherited IRA.

Depending on the beneficiary's status and IRS requirements, distributions may be subject to:

• The 10-Year Rule or
• Life expectancy payout rules available to certain Eligible Designated Beneficiaries (EDBs). If the account owner died before January 1, 2020 (before the SECURE Act took effect), the old beneficiary distribution rules generally apply and are grandfathered.
  
  

Who Qualifies as an Eligible Designated Beneficiary (EDB)*?

While certain beneficiaries may qualify for inherited account distribution options under IRS regulations, AXI currently offers these options only to surviving spouses and eligible adult family-member beneficiaries. Spouse refers only to an individual who is legally married to the account owner under applicable law. Common-law partners, domestic partners, life partners, or other non-marital relationships do not qualify as a spouse unless recognized as a legal marriage under applicable state law.

Minor children, disabled individuals, and chronically ill individuals are excluded from eligibility.

What Is the 10-Year Rule for a Qualified Annuity?

Most non-spouse beneficiaries who inherit an IRA must withdraw the entire account balance by December 31 of the tenth year following the year of the owner's death.

For example, if the owner dies in 2025, the inherited IRA generally must be fully distributed by December 31, 2035.

What Is an Inherited Non-Qualified Annuity?

An inherited non-qualified annuity is an annuity contract received by a beneficiary after the death of the original owner.

What Is the 5-Year Rule for Inherited Non-Qualified Annuities?

In general, individual (human) beneficiaries may be eligible to take distributions over their life expectancy if they qualify under the applicable IRS rules. By contrast, non-individual beneficiaries, such as estates, certain trusts, and charities, are generally subject to the 5-year rule (or other applicable IRS distribution rules).

• If the designated beneficiary is a non-spouse (i.e., any other living breathing human being besides the annuity owner’s surviving spouse), the beneficiary can stretch distributions over his/her life expectancy over the life of such designated beneficiary (or over a period not extending beyond the life expectancy of such beneficiary), beginning in the year after death.
  
  
• If the beneficiary is a non-designated beneficiary (e.g., trust (generally), estate, charity), the annuity must be liquidated within 5 years of the annuity owner’s death.

Additional considerations include:

• Withdrawals are not permitted during the first contract year.
• Withdrawals made beginning in the second contract year may be subject to surrender charges.
• For non-spouse beneficiaries, Axonic will only accept inherited non-qualified annuity contracts for individuals who have not yet begun taking distributions.

Important Things to Know

• Withdrawals may be subject to surrender charges depending on the product selected.
• Product duration cannot exceed the applicable IRS distribution period.
• Beneficiaries should consult with a financial professional and tax advisor before making decisions regarding inherited assets.

Note: The Inherited Account option is available on all fixed and fixed indexed annuity products currently offered by Axonic Insurance.

Tax Considerations

• Distributions from Traditional IRAs are generally taxable as ordinary income.
• Qualified Roth IRA distributions are generally tax-free if IRS requirements are met.
• For inherited non-qualified annuities and earnings are generally taxable as ordinary income, while the original principal is typically not taxable.

Important Disclosure

The information provided by Axonic Insurance is for educational purposes only and should not be considered legal, tax, or financial advice. Individuals should consult their tax advisor, attorney, or financial professional regarding their specific circumstances.

Last updated 6/30/26.