If 200k after-tax dollars are invested in an annuity and it earned $20k at its term, but only $100k is pulled out and the other $120k remains in annuity, how much is taxable income?
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For a nonperiodic distribution from a nonqualified annuity, the taxable gains come out first. The distribution of $100k would be a distribution of $20k taxable gains and $80k nontaxable return of investment in the contract. The $120k remaining in the annuity would be all investment in the contract.
most annuities provide that at maturity the annuitant can take a lump sum payout or receive a series of payments over their life expectancy, or a series of payments based on a joint and survivor annuity. Whether you can do what you propose should be discussed with the company.
For a nonperiodic distribution from a nonqualified annuity, the taxable gains come out first. The distribution of $100k would be a distribution of $20k taxable gains and $80k nontaxable return of investment in the contract. The $120k remaining in the annuity would be all investment in the contract.
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