Annuity
Several years ago (1994) my husband put approx. $4,000 in a flexible premium deferred annuity (type-IRA). He turned 70 this year and must decide what to do with this account. It’s now valued at approx. $15,000. Is it wiser to roll this over into a traditional IRA or should he just take the cash and pay the taxes on it? I doubt that this would bump us into a different tax bracket. Thank you.
Terry Says
Well, you have a nice gain, and it would involve taxes. Did you purchase it inside an IRA? If not, you can’t roll it over now into an IRA.
But if not in an IRA, you could keep this money growing tax deferred in a MYGA– multi-year guaranteed annuity. That works like a CD, but is not FDIC guaranteed. See if your insurance company offers that option.
One thing to remember, taking the cash might not put you in a higher tax bracket, but could increase your Medicare Part B and D premiums. So check out your proposed income level before taking the cash.
The real answer is whether you want to reward yourself for this nice investment by spending it now, while you can enjoy it! And if it doesn’t impact your tax bracket or Medicare premiums, you have my “blessing” to enjoy it (after setting aside money for taxes!).
