rgp
Well-known Member
- Location
- Milford,OH
I have one that has made a decent profit , my question is ....... what do I do with it ? How do I best avoid the tax man ? I am researching it ...... I just thought I'd ask here as well.
Surrendering an annuity
- Thread starter rgp
- Start date
Myquest55
Member
- Location
- Happily in MAINE
Hi rgp - we just discussed this with our Prudential Rep!
What do YOU want to do with it? Is it Qualified (IRA) or Non-Qualified (Not an IRA - just an investment). IF it is an IRA - you will be taxed on whatever you take from it. You can take an amount monthly, quarterly on once a year. If it is NOT an IRA, you will only be taxed on about 1/2 of it - or the "earned dividend income" and NOT the principal.
If you don't NEED it, you might just let it continue to grow. Make sure there are designated beneficiaries. IF it is an IRA - the beneficiaries will inherit the cash value, or death value, and have 10 years to liquidate it as Taxable Income. IF is is NOT an IRA, they will also inherit the cash, or death value, but they will get cash and be able to invest as they see fit. Again - taxed on the earned dividend income.
If your spouse is the beneficiary there are other rules. It depends on the original contract. Are you still in touch with the Rep. who set it up for you?
We have several annuities so our Rep. has homework do dig up the contract records on file and help us to understand what OUR options are for each one. Thus we can explain it to our kids. I have three annuities (one ROTH - tax free) that we plan to liquidate to help pay for our future Retirement Community Condo/apartment.
Let us know how this turns out.
What do YOU want to do with it? Is it Qualified (IRA) or Non-Qualified (Not an IRA - just an investment). IF it is an IRA - you will be taxed on whatever you take from it. You can take an amount monthly, quarterly on once a year. If it is NOT an IRA, you will only be taxed on about 1/2 of it - or the "earned dividend income" and NOT the principal.
If you don't NEED it, you might just let it continue to grow. Make sure there are designated beneficiaries. IF it is an IRA - the beneficiaries will inherit the cash value, or death value, and have 10 years to liquidate it as Taxable Income. IF is is NOT an IRA, they will also inherit the cash, or death value, but they will get cash and be able to invest as they see fit. Again - taxed on the earned dividend income.
If your spouse is the beneficiary there are other rules. It depends on the original contract. Are you still in touch with the Rep. who set it up for you?
We have several annuities so our Rep. has homework do dig up the contract records on file and help us to understand what OUR options are for each one. Thus we can explain it to our kids. I have three annuities (one ROTH - tax free) that we plan to liquidate to help pay for our future Retirement Community Condo/apartment.
Let us know how this turns out.