On your answer regarding getting a pension in the form of annuity, you said that the SS benefits would be treated as an annuitized income when determining how much of the retirement income comes from annuities. Any idea how much would be the amount? Thank you.
That comment only referred to asset allocation and both SS and SPIAs are periodic payments where you cannot access the present cash value. As for taxation of these income sources, the rules differ. SS is not taxable if AGI or taxable income is low enough, and 85% of SS is the max amount subject to tax for higher incomes. The taxable amount of an SPIA distribution is based on the proportion of the imputed gains to the premium paid for the SPIA. Ordinary taxable income rates apply to the taxable portions of both SS and annuity income. Finally, the taxable portion of the SPIA is counted in AGI to determine how much of the SS is taxed. With these variables a taxpayer would have to crunch the numbers with their own personal income using a tax program, or have a tax preparer do it.
Thank you very much. I have another question regarding IRAs: If the IRA owner dies and had named a child as the designated beneficiary and the mother as the contingent beneficiary, how the distribution or RMD work? Thank you again
As long as the child is living at the death of the owner, the child inherits the IRA and RMDs are based on the life expectancy of the child only. The mother is not considered. However, if the child were to disclaim all or part of the IRA, the disclaimed portion would be inherited by mother.
Permalink Submitted by David Mertz on Wed, 2019-08-14 17:42
Social Security benefits are roughly equivalent to annuity income in that they provide an income stream for life. The Social Security Administration provides individuals with annual estimates of their future benefits based on their earnings history: https://www.ssa.gov/myaccount/