I purchased a Single Premium Immediate Annuity, SPIA from a highly rated company. Used about 20% of my savings. I get a generous monthly payment. With pension and SS a terrific income. No market worries. Absolutely love it.
@@davemccune5526 - I'm not an FA, CFP or tax planner or preparer, but I'm pretty certain that the taxes owed on annuity income depends on how the annuity was funded. If funded from a (pre-tax) qualified retirement plan, all of the annuity payments would be taxable. If funded from a taxable account, only payments in excess of your cost basis are taxable, which means during the earlier years you won't owe any taxes. I haven't looked into this one, but I imagine if you fund from a Roth type account all distributions would be tax-free. I believe the annuity provider is responsible for tracking such cost basis and taxability and reporting it on a 1099-R, so it's not like you have to do this bookkeeping. Any taxable portion reported on your 1099-R is treated as ordinary (pension) income and is taxed at ordinary income tax rates. These are basically tax treatments that make sense. The only special tax treatment is really that taxation on any growth in a deferred annuity is also deferred until you receive payment of the growth. This is unlike the tax treatment of a taxable investment account where dividends and interest are taxed in the year it's earned, but it is sort of like the growth in the value of an equity. However long-term growth in an equity has a superior tax treatment because the gains are taxed using LTCG tax rates / brackets, which is cheaper than the ordinary income rates / brackets that annuity income is taxed. So whether or not the tax treatment is cheaper depends on whether or not you are comparing this against interest earned from say, bonds, or are you comparing this against capital gains from equities. How this impacts your situation will depend on what other taxable income and deductions you might have. If you need specific tax advice and can't find answers on irs.gov, I'd recommend seeking out a tax professional. Hope that helps. I also hope this explains why I said, "It depends." 😉🤷♂️
There’s no explanation. Just legal and accounting stuff. Typical of annuity sale, never explain the real cost of annuity to customers-their secret get rich scheme 😂
Best video on annuity plans- explained so well in a open, full disclosure fashion. Thanks Troy
Hi Joseph! Thanks for watching - so glad you enjoyed it!
I love this channel! The best retirement DETAILS on TH-cam. 😀👍
I purchased a Single Premium Immediate Annuity, SPIA from a highly rated company. Used about 20% of my savings. I get a generous monthly payment. With pension and SS a terrific income. No market worries. Absolutely love it.
my exact plan especially with the rise in interest rate
V p, Can you please provide me with details how to purchase this?
How did you purchase it?
How much interest you are getting 🤔
Thanks for the information about the "statutory accounting system"!
Excellent. Eager to follow this series!
Very informative video. Thank you.
Thank you @Lorraine P!
Are the death benefits taxable?
Is income fron an annuity considered tax free?
It depends.
@@joelcorley3478 I was hoping for a little more than "it depends".
@@davemccune5526 - I'm not an FA, CFP or tax planner or preparer, but I'm pretty certain that the taxes owed on annuity income depends on how the annuity was funded. If funded from a (pre-tax) qualified retirement plan, all of the annuity payments would be taxable. If funded from a taxable account, only payments in excess of your cost basis are taxable, which means during the earlier years you won't owe any taxes. I haven't looked into this one, but I imagine if you fund from a Roth type account all distributions would be tax-free. I believe the annuity provider is responsible for tracking such cost basis and taxability and reporting it on a 1099-R, so it's not like you have to do this bookkeeping. Any taxable portion reported on your 1099-R is treated as ordinary (pension) income and is taxed at ordinary income tax rates.
These are basically tax treatments that make sense. The only special tax treatment is really that taxation on any growth in a deferred annuity is also deferred until you receive payment of the growth. This is unlike the tax treatment of a taxable investment account where dividends and interest are taxed in the year it's earned, but it is sort of like the growth in the value of an equity. However long-term growth in an equity has a superior tax treatment because the gains are taxed using LTCG tax rates / brackets, which is cheaper than the ordinary income rates / brackets that annuity income is taxed. So whether or not the tax treatment is cheaper depends on whether or not you are comparing this against interest earned from say, bonds, or are you comparing this against capital gains from equities.
How this impacts your situation will depend on what other taxable income and deductions you might have. If you need specific tax advice and can't find answers on irs.gov, I'd recommend seeking out a tax professional. Hope that helps. I also hope this explains why I said, "It depends." 😉🤷♂️
There’s no explanation. Just legal and accounting stuff. Typical of annuity sale, never explain the real cost of annuity to customers-their secret get rich scheme 😂
Annuities- introduction to Bankruptcy 101
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