Yes, it is typical that annuity, or lump sum (say, 3% a year ... ) payouts from tax-deferred plans are taxable income. But payments from a Qualified annuity (which is what we are talking about here) are, like IRA withdrawals, not subject to NIIT. They could result in pushing other income into NIIT, however.Okay, so the money you've annuitized does not count in RMD calculations. But I'm assuming your annual annuity payments, being taxable, still count when computing Modified Adjusted Gross Income. Correct?
Just for completeness, I should mention that historically (my mother, for example) it used to be possible for TIAA-CREF customers to have both after-tax principal (sometimes referred to as "Investment in Contract") and tax-deferred income plus appreciation, inside the same account. There could be people still living who get a 1099 showing a small amount of untaxed income, and a larger amount of taxable income.
It is not incorrect to use the word "annuitizing" here, but it's important that while a [TIAA] TPA (Transfer Payout Annuity), which is what this appears to reference, IS "an annuity", it is frequently not a source of taxable income, because it is often placed into another tax-deferred investment, not paid into the hands of the owner.FWIW, one of a small number of beneficial things our former advisor did was start annuitizing my wife's TIAA account in 2014 and deposit the proceeds in her rollover IRA with the last payment completed in 2023.
Statistics: Posted by crefwatch — Sun Jan 11, 2026 9:32 am — Replies 49 — Views 4343