Taxes on annuity withdrawal?

Question

Does anyone know how to estimate the taxes from withdrawing from an annuity?

Answer 1

The first piece of the puzzle to know before you can estimate your tax is the cost basis of the annuity. This is the amount originally invested in the annuity, plus any additional capital contributions.

You must know what your basis is before you can determine the tax. Another missing bit of information is your age. Typically, if you are under the age of 59 and a half, in most circumstances you will pay an additional 10% penalty on the earnings. There are few exceptions to this rule for annuities; one is being over the age of 59.5, another is if the annuity was inherited or passed to you by the death of a family member.

Once you determine your basis, the rest of the annuity would be earnings on the original investment and this is the amount that will be taxed. The amount of tax on the earnings depends on your other income and your age. Worst case scenario, you will owe the penalty, so figure on owing the penalty of 10%. Figure 25% for federal taxes, on the high end, plus 10% for the penalty and add whatever rate your state charges, maybe another 6% for state tax. You are looking at at least 41% tax on the earnings. Remember, you are taxed and penalized only on the earnings, not on the original investment, unless the original investment was never taxed.

This is not an easy question to answer, given the facts, but that just about covers all avenues you might run into.

Hope that helps.

Answer 2

not sure specially on the subject of the variety of annuity, yet while it grow to be possible, you likely might have had to do some thing interior 60 days (like a rollover). Too previous due now. I had an IRA at an coverage employer that i did no longer understand grow to be somebody Retirement Annuity, yet i grow to be waiting to flow that to somebody Retirement Account (direct trustee to trustee flow devoid of withholding).

Answer 3

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