Beneficiary annuity payout is the pattern and method by which an inherited annuity distributes income or lump sums to a designated beneficiary after the ownerTMs or annuitantTMs death. Payout options may include lump sum, systematic withdrawals over a fixed period, life expectancy'based payouts (where still allowed), or distributions under the SECURE ActTMs 10'year rule for many non'spouse beneficiaries of qualified contracts. For nonqualified annuities, beneficiaries typically owe ordinary income tax on the gain portion of distributions, while basis is recovered tax'free. The chosen payout structure affects cash flow, taxation timing, and how closely the distribution matches the original ownerTMs planning intent.

Advisors counsel beneficiaries on annuity payout choices after a death claim, coordinating with CPAs to evaluate tax implications of lump sum versus stretched payments. They help heirs understand that, unlike life insurance, inherited annuities are often taxable and that poor payout choices can trigger avoidable tax acceleration. CarriersTM claims departments provide forms outlining available options under contract terms and current law. Advisors may also discuss whether to preserve tax deferral by keeping funds within beneficiary contracts where permitted. Understanding beneficiary annuity payouts allows advisors to support families in emotionally difficult moments while still making thoughtful decisions about income and taxes.