Does Beneficiary Pay Taxes On Annuities? 
If you have had a non-qualified annuity for any length of time you most like have accumulated tax deferred earnings . This means that the growth in the annuity account value has not yet been taxed . When you die and the annuity proceeds are paid , the tax deferred earnings will be taxed as ordinary income to your beneficiary . There is a spousal provision whereby if the beneficiary is your spouse they will have the option to continue to defer the taxes in the annuity . When your spouse dies , any deferred earnings still held by the annuity will now be taxable to your spouses beneficiary . 