The question was: Are amounts received under commercial annuity contracts subject to withholding taxes?
The answer is: Yes. However, the payee generally may elect not to have anything withheld. Only the amount it is reasonable to believe is includable in income is subject to withholding. Amounts are to be withheld from periodic payments at the same rate as wages.
Payments are periodic, even if they are variable, if they are payable over a period of more than a year. If payments are not periodic, 10% of the includable amount is withheld. Payments made to the beneficiary of a deceased payee are subject to withholding under the same rules (IRC Secs. 3405(a), 3405(b); Temp. Treas. Reg. ?35.3405-1T(A-9, A-10, A-12, A-17, F-19 through 24).