Under annuity tax rules, a portion of each payment is considered a return of principal excluded from taxation. Recognizing only a portion of your annuity payment in your tax return during this period might lower your overall tax rate and reduce the portion of any taxable Social Security payment. Click here to Learn Even More.
Design Your Own Annuity.
- Click to see your Active Annuity Choice
Active Annuity Choice
You Gender: Male Age: 70 Income Fequency: Annualy Premium: $100,000 Annuity Payment: $0 Type of Annuity: Life with 10 Years Single or Joint: Single Payment Pattern: Level
Understand How Your Annuity Works.
Compare Your Annuity to Other Annuities.
Request a Personalized Go2Income Guide to Selecting Your Annuity.
If the source of premiums for the annuity is from personal savings and not a 401(k) or Rollover IRA, then a portion of your annuity payments is free from tax. While the actual formula is quite complex, the principles are straight forward. If a portion of your premium comes from funds that have already been taxed - or what is called a “cost basis,” - then that cost basis is recovered over the period of the payments. If that cost basis has not been recovered at the time of death, the unrecovered cost basis can be a deduction in the decedent's final tax return. If you make a withdrawal from your commuted value, then that amount may reflect the recovery of a cost basis.