Nevada Premium Tax

[rats0001]

Nevada has a 3.5% tax on non-qualified annuitization. If my client annuitizes in Indiana while an Indiana resident, then relocates to Nevada and becomes a Nevada resident, will the insurance company reduce the payout to my client by the 3.5% tax?

I've never had this come up before and searching the internet has yielded various results.

 

[Tahoe Ray]

Nevada has a 3.5% tax on non-qualified annuitization. If my client annuitizes in Indiana while an Indiana resident, then relocates to Nevada and becomes a Nevada resident, will the insurance company reduce the payout to my client by the 3.5% tax?

I've never had this come up before and searching the internet has yielded various results.

That is a better question for your carrier than for the tax law....CA and NV both allow for the tax to be levied (and passed through to the owner/annuitant) on the front (purchase quote) or the back end (upon annuitization).

I do not know how they would treat prior annuitization in a non-premium tax state. If the payments are being direct deposited, it would be very hard to monitor...especially in NV where there is no state income tax.

Have you tried the carrier?

 

[rayluk]

Not a CPA here, but I doubt it would affect the payment because of reallocation. Insurance contract is governed at state level, particularly where the policy is issued. In this case, even if your client moves, the policy was not issued in Nevada. The contract itself would also spell out the actual amount upon annuaitization.

The only tax I can think of is income tax. check with a tax guy, not the carrier. Most customer service reps either do not know the answer, tell you to consult your tax advisors, or give you wrong info. It is not their job to know.

 

[Tahoe Ray]

Not a CPA here, but I doubt it would affect the payment because of reallocation. Insurance contract is governed at state level, particularly where the policy is issued. In this case, even if your client moves, the policy was not issued in Nevada. The contract itself would also spell out the actual amount upon annuaitization.

The only tax I can think of is income tax. check with a tax guy, not the carrier. Most customer service reps either do not know the answer, tell you to consult your tax advisors, or give you wrong info. It is not their job to know.

Nevada does not have state income tax so I don't know how a tax guy is going to help. The carrier is the one who assesses the premium tax to the owner/annuitant, not the state. The state assesses the carrier.

While I agree that the carriers often give bad info, this is a company practice so they're the only ones who can answer the question.