Annuity Income

I have a fixed annuity that has increased in value over many years. I have not yet begun to take any withdrawals. As I approach 70 years old, I realize that  I may not need this money and I can leave it to my beneficiary, wife and someday our two children will inherit. My annuity rep. explained that I may withdraw 5% penalty free each year. He explained that some annuity products allow 10%  penalty free per year. He explained that I am not required to take RMD's from this non-qualified annuity when I turn 73. The annuity rep. said any money distributed will be considered income and will increase my AGI and possibly raise future medicare premiums due to the $194,000 current IRMAA bracket . 

Or alternatively, I may decide to annuitize. The reps said that the balance would stop earning the current fixed 5% interest and that I must choose how I want to annuitize i.e. years certain, my single life only, or survivor's life + children, options. As a Turbo Tax advisor, which is the most advantageous choice to reduce my taxes over the next 25 years? Should I annuitize or not? Should I plan to withdraw small amounts annually 5%-10%? Or should I continue to delay all withdrawals, in which case beneficiaries will pay future taxes?