"BigB" <bnovinger[at]adelphia.net> wrote:

- quote -

Bad news for you - by default, monies are removed from an
annuity under the LIFO rules, Last In, First Out. So,
unless you annuitize the contract or take out more than the
gain, you will pay tax on all that you take out. Remember,
earnings come out first, then cost basis.

Gene E. Utterback, EA, RFC, ABA

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Say I have a variable annuity with a value of 500k and a
cost basis of 250k. If I move 250k to another company each
contract will have a cost basis of 125k and a gain of
125k....correct ?

I have been reading the IRS publications and this appears
correct. If I would take 250k out of the original 500k and
annuitize it for life would it all be gain or will it be
both gain and cost.

In other words what would be the best way to get the lump
sum gain out so I can access a large sum about 100k without
all being taxable.

If I would do the first case and would make a withdraw from
my original contract could they tax the whole transfer as
tax avoidiance (I know if it looks like a duck and quacks
like a duck....)

<< ================================================== ===== > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >