What are the tax ramifications on a 1 million dollar annuity which has accrued 250,000 dollars interest in the last 5 years, has no penalty clause( for withdrawal), and the proceeds will go to 5 heirs(children) in the form of single premium annuities-same company, which is a restricted non-profit military officer company.
Get quick answers to your annuity questions: Call 800-872-6684 (9-5 EST)
Just to clarify I am assuming this money in the annuity is not an IRA or tax qualified. If you take money out of the annuity; the interest must come out first, which is taxable at your current tax rate. All the interest ($250,000) must come out before you can get any of your original investment. A second option is to start a pay out on the annuity (to annuitize the annuity). This could be done over a number of years 5, 10, etc. or your life expectancy or a combination of both. If one receives payment in this form; part of each payment is return on investment and part interest, which is taxed. The Insurance Company would give you that information.
If you pass away; your beneficiaries (5 children) would have a choice between taking the money all at once or annuitize the amount over some time period or life or combination. They will be taxed on their one-fifth share at their income tax rate.
Source - dallasnews.com - 10-25-2009
I was hesitant at first to buy an annuity on the internet. Once I got your quote report and read your reviews I was happy I found your website. Your phone reps were always very helpful. You made the whole thing go really simple. Thank you guys!
We'd love to hear from you!
Please post your comment or question. It's completely safe – we never publish your email address.
There are no comments yet. Do you have any questions?