Extra tax on annuity
Dear Terry: I recall your article years ago about an extra tax on large annuities. But I cannot recall how large an annuity must be to receive that extra tax. My beneficiaries may have that probem. How large must an annuity be to be burdened with the extra tax? Thank you so much.
Terry Says
Honestly, I have no idea what you’re talking about.
If you own an annuity at death, its value is part of your estate. But unless your entire estate is well over $11 million there is no tax.
If you withdraw money from an annuity, the earnings portion is taxable as ordinary income.
And if you need to “invade” the annuity — and only deferred annuities let you do that — you likely face a penalty that can add to your costs.
