Withdrawal Value Question
We have a client that wants to know what tax rate she will be in if she withdraws money from her annuity. She has an account value of $343,706.94 but has a Protected Withdrawal Value of $446,699.50. Which amount would her withdrawal be based on?
Permalink Submitted by Alan - IRA critic on Thu, 2023-09-07 20:47
The protected amount can usually only be tapped over a period of years. Amounts received are fully taxable until all the gains on the annuity have been distributed. There is also a 10% penalty if under 59.5 on the taxable amount. In any particular year client’s tax rate depends on the amount of taxable income less deductions and the annuity is probably only a portion of client’s taxable income. Tax rates increase as taxable income increases therefore, the client should avoid very large distributions in a single year.