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"BMS" <mcfarland[at]yahoo.com> wrote in message
news:ssOdnaC7MrcsqmrfRVn-hg[at]comcast.com...
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Yes, payments began after the first month and 18% of each payment was
considered taxable. I have been researching the tax implications and find
it confusing. I will consult with the IRS and my insurance agent and see if
I get consistent answers. Woops... I almost forgot about the tax NG which
I've found helpful on other issues.

As far as long term care goes, she has enough cash to last several years in
nursing home if it comes to that, and also owns a house. She has health
problems and I doubt if she'd pay high premiums for long term care insurance
if they would insure her.

Thank you for your input.

JB

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Yes, this was purchased as a non qualified annuity, the money comes out
first is taxed as ordinary income, until you reach the original
contributions that have been taxed.

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over and defer the taxes.

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that are inconsistent. For example, an immediate annuity implies that you
are getting a cash flow already. Get with somebody that can take an
objective view of your situation. You have bigger problems, such as long
term care on the horizion.

Good luck

My friend had an annuity mature recently and I am pondering what would be
the best strategy for handling the balance. I am not savvy on these
investments.

This is a 15 year single premium immediate annuity with income payments
beginning one month after purchase. It's non-participating.

Her final statement includes the following information for the entire
period:

Beginning commuted value: 50000
Monthly payments: 60930
Interest credits: 39461.80
Ending commuted value: 28531.80


The insurance company that handles it simply says you can annuitize it or
take it out.

The bank that sold it to her says if you annuitize it, you cannot defer the
tax on the cash flow. This did not make sense to me but I did not ask for
details.


A big issue I see is the tax bill generated by this thing. Each year since
this contract started, $727.08 was reported as taxable income on her 1009-R
form. That comes to a total of $10906.20.

My questions:

1. If she takes the commuted value would she owe tax on the total interest
credits ($39461.80) minus the amount already reported ($10906.20)?

2. If so, is there a way to further defer or avoid tax liabilty on this
interest by "annuitizing" or some other option?


If it makes any difference, the owner, my significant other, is 72 yrs old
and and unable to handle her affairs. The interest rate is set by the whim
of directors after the first year with no criteria given. They did not
bother informing her that the annuity had matured and said that was not an
oversight. With these negatives, I am inclined to have her take the money
and sock it in tbills for now. I see no reason to continue with this opaque
investment but maybe I've overlooked something?



Thanks for reading this.

JB