How an Annuity is Structured
In general, there are three parties to an annuity (plus the insurance company): the owner, the annuitant and the beneficiary.
The owner controls incidents of ownership in an annuity. They have the right to the cash surrender value. They can also name the beneficiary, assign the policy, and make withdrawals. Oftentimes, the owner is also the annuitant. The owner may be an individual or a trust.
Most importantly, the owner is the person (or trust) who receives the tax benefit of the annuity during the accumulation phase of the contract. (The accumulation phase is the period of time that the annuity is growing; the income phase is the period of time when you are taking money out of your annuity.) The owner does not pay taxes on the income earned (the tax-deferral), however, owners do pay the taxes on withdrawals made during the accumulation phase. The owner is normally the person who receives the payments during the income phase, but he can also assign these payments to the annuitant.
The annuitant is the person on whose life the terms (depending on the particular annuity, it could be their age, gender or state of residence) of the annuity are measured. Again, the annuitant may also be the owner. As in other life insurance policies, the beneficiary is the recipient of the death benefit, should it be paid out.
Why Is My Social Security Being Taxed?
In this series of blogs I'm going to attempt to explain how to minimize your social security taxes. Most seniors can avoid paying higher taxes on social security by simply moving money that you are not using and getting taxed on into something tax differed. If you are single and make less than $25,000.00 a year or married and make less than $32,000 you should not have to pay any taxes on your social security. If you make 25k-34k and single you would pay 50% or 32k-44k and married you would pay 50% taxes. There are other levels and we will touch them over the next couple of weeks. Once again today we will talk about how you can save your social security from taxation with a little preplanning. Lets say that you have a 401k that you plan on using for some type of income. You also have been putting away money over the years into various taxable accounts, such as C.D.'s money market accounts and mutual funds.
What you need to do first is put a plan together. Find out what your social security benefits are, find out how much money a month or year you need to live on. Take a portion of the taxable income from your other investments and buy an immediate annuity. Your advisor can figure out what your monthly payments would be, so you can implement that into your preplanning.
Then take a majority of the rest of your assets from your 401k and other investments and start to ladder them with annuities, I would suggest a 5 year 7 year and 10 year. By doing this you give yourself tax deferral. This means that your money will not be taxed until you withdrawal it. This also would give you access to your money at different times of your life. It also gives you liquidity to move money into better products with higher rates without locking all of your money up for a longer set period of time.
If you have questions or want more info just email me at lynn.tomaro@comcast.net.
In this series of blogs I'm going to attempt to explain how to minimize your social security taxes. Most seniors can avoid paying higher taxes on social security by simply moving money that you are not using and getting taxed on into something tax differed. If you are single and make less than $25,000.00 a year or married and make less than $32,000 you should not have to pay any taxes on your social security. If you make 25k-34k and single you would pay 50% or 32k-44k and married you would pay 50% taxes. There are other levels and we will touch them over the next couple of weeks. Once again today we will talk about how you can save your social security from taxation with a little preplanning. Lets say that you have a 401k that you plan on using for some type of income. You also have been putting away money over the years into various taxable accounts, such as C.D.'s money market accounts and mutual funds.
What you need to do first is put a plan together. Find out what your social security benefits are, find out how much money a month or year you need to live on. Take a portion of the taxable income from your other investments and buy an immediate annuity. Your advisor can figure out what your monthly payments would be, so you can implement that into your preplanning.
Then take a majority of the rest of your assets from your 401k and other investments and start to ladder them with annuities, I would suggest a 5 year 7 year and 10 year. By doing this you give yourself tax deferral. This means that your money will not be taxed until you withdrawal it. This also would give you access to your money at different times of your life. It also gives you liquidity to move money into better products with higher rates without locking all of your money up for a longer set period of time.
If you have questions or want more info just email me at lynn.tomaro@comcast.net.
Subscribe to:
Posts (Atom)