The federal income taxation of annuities: a success story

Article Abstract:

Congress successfully encouraged retirement planning through annuity taxation policies but restrictions on annuity tax exemptions that are being considered could reduce that success. Annuities require fixed payments before and after the contract holder's death and the systematic liquidation of investments and income within the contract over the holder's lifetime. Taxation on accrued income is deferred until it is dispersed while investment returns, such as premium payments, are exempt. Annuities provide insurance against outliving assets but law changes could make them less attractive.

Laws, regulations and rules, Retirement planning

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The taxation of accelerated benefits under a life insurance contract

Article Abstract:

The Treasury Dept issued proposed regulations for IRC sections 101(a), 7702 and 7702A to allow accelerated life insurance benefits to qualify for life insurance exemptions when the policy holder is terminally ill or needs long-term care. Policy holders must have a 12 month or less life expectancy, the benefits and cash surrender value must be proportionately reduced and benefits must equal at least the reduction's minimum present value.

Terminally ill persons, Terminally ill, Life insurance, Accelerated death benefits

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Planning for older taxpayers with nonqualified deferred annuities

Article Abstract:

Income taxation on Social Security benefits may be reduced by the use of annuity contracts. Older taxpayers may be able to cut their taxes by investing in annuities, depending on their level of provisional income. A formula is given that assists the financial planner in determining if a shift in investable funds to investment in annuities will save taxes on Social Security benefits.

Analysis, Retirement income, Social security

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