Hoping someone here can point me in the right direction. Client inherited a nonqualified annuity and failed to take action on it past the deadline set by the company where it was held. She contacted the company since then and they informed her that it was escheated to the State of Illinois.

If/when she is able to reclaim the assets, how will she be taxed? I’m assuming she will immediately need to pay income tax on 100% of the previously-deferred gains. Hoping to get a link to a resource that confirms that one way or another, and I can’t find anything in my online research that specifically addresses this for nonqualified annuities.

Thanks for your time!

Eric