If a non-spouse beneficiary opts for a lifetime income option, what implication does this have on the distribution of annuity proceeds?

Choosing a lifetime income option as a non-spouse beneficiary means that the beneficiary will receive annuity payments for the duration of their life. This is significant because it ensures a stream of income that the beneficiary cannot outlive, adding a layer of financial security. The lifetime income option is designed to provide a consistent and reliable source of income, catering to the needs of individuals who may depend on these funds for their living expenses.

The other implications of this choice, such as immediate payment requirements or specific timeframes for distribution, do not apply when a lifetime income option is selected. Furthermore, while the tax implications of annuities can be complex, choosing the lifetime income option does not inherently exempt the beneficiary from taxation. Thus, the lifelong expenditure of proceeds establishes a long-term financial commitment rather than a one-time distribution or time-limited payout.