I think that you should look at whether you or your daughter would have a lower overall tax burden as a result of withdrawing from the annuity.I have a Transamerica variable annuity. Started it with $50,000 in 1994. As of today, ~30 years later, it's at $540,000. I'm pondering what to do with it. My inclination is to leave it to our daughter and let her "stretch" it. No problem determining the basis, since it's never been moved - basis is $50,000. The Transamerica investment choices are pretty good. Would appreciate any thoughts on all of this. The variable annuity is about 10% of our investments.
Small Law
By “tax burden”, I mean not only increased federal income tax as a result of withdrawal, but also secondary effects such as state taxes, IRMAA, NIIT, ACA subsidies, etc.
Further complicating the calculation is the fact that earnings on the annuity will all be taxed at ordinary income rates, while equity investments in a taxable account will be taxed at the preferable capital gains and qualifies dividend rates.
Finally, the annuity has certain fees thst a low cost taxable account doesn’t have.
Lots of considerations, with no single right answer.
Statistics: Posted by Stinky — Sun Dec 08, 2024 10:33 am — Replies 17 — Views 1421