These Deferred Annuity Mistakes Can Be Taxing


Note this article's original audience is Certified Public Accountants. That's right many CPAs are not even well versed in the intricate details of retirement account taxation. This is a valuable 120 second read that gives you a little bit of an edge when exploring options with your financial team. Article: The tax treatment of nonqualified deferred annuities (annuities that are not part of a tax-qualified plan such as an IRA or 401(k)) appears to be fairly clear-cut: Earnings aren't taxed until they're withdrawn, a distribution that represents a return of your investment in the contract is not taxed, earnings are taxed as ordinary income and not capital gains, a distribution of earnings taken before age 59½ is subject to a 10% tax penalty unless an exception applies. Simple, right? Yes--except for those particular circumstances that trigger unexpected tax consequences.Ownership by a "non-natural entity""Non-natural entity" is tax speak meaning the annuity owner is not a human being, but is an entity (e.g., trust...Click here for full article


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