topic Can an annuity distribution be averaged yearly? in Get your taxes done using TurboTax

Can an annuity distribution be averaged yearly?

grkno8450 — Mon, 09 Mar 2026 06:09:25 GMT

My financial advisor sold an annuity that was not part of my IRA. Therefore, I received a large distribution that put me in a much higher bracket. Is there anything I can do to lower the impact of this? Maybe averaging? I think I will just have to deal with the costly mistake. Any Ideas?

Re: Can an annuity distribution be averaged yearly?

ColeenD3 — Mon, 14 Feb 2022 18:24:11 GMT

There isn't much you can do. The distribution from the annuity will include amounts treated as a recovery of your cost (investment in the contract). That part is tax free. The first step in figuring how much of the distribution is taxable is to determine the cost of your pension or annuity. In general, the cost is the net investment in the contract as of the annuity starting date. The issuer of the annuity should be able to provide you with this information.

If you are still working, you can contribute to a Traditional IRA. If you have a HDHP, you can contribute to an HSA.

Re: Can an annuity distribution be averaged yearly?

grkno8450 — Thu, 17 Feb 2022 17:17:25 GMT

I guess if I don't have a HDSP, I don't need to know what it is. Thank anyway.

Re: Can an annuity distribution be averaged yearly?

DaveF1006 — Thu, 17 Feb 2022 21:07:47 GMT

@grkno8450 A HDHP is a high deductible health plan. If you have one of these, you can contribute to an Health Savings Account, whereas distributions of these plan are not taxable if you use this for health care services. Here is an interesting article published by Mayo Clinic that will give you an in-depth look on the advantages of having a Health Savings Account.