[HJBeck]

Agree with this assessment.

[FredJacobs]

Originally Posted by retiredguy123

I would never buy an annuity. The advisor is recommending it because they want to make a commission on your money that will be about 10 percent of the cost. So, if you invest $360,000 in the annuity, the advisor will make about $36,000. I very nice pay day. Don't do it without doing a lot of research on annuities. They are almost never a good investment.

On a $200,000 long term capital gain, the tax should only be about $30,000, which is 15 percent, unless there are other circumstances.

Sorry, gains from annuities are taxed as ordinary income not capital gains. If you have no other taxable income, your gain of $40,000 would be reduced by the standard deduction - $12,550 - leaving $27,450 as taxable income. The tax on $27,450 for a single person, under age 65, is roughly $3,000.

I am no longer licensed to give investment advice. From a tax standpoint and that you need income it might be a good idea to surrender the annuity and find a vehicle to provide some annual income.

Fred Jacobs
Expert Tax Prep

[billthecpa]

I find it mind-boggling that someone would ask this question of anyone other than a qualified, experienced, professional financial or investment advisor (who does not sell annuities).

[dewilson58]

Originally Posted by billthecpa

I find it mind-boggling that someone would ask this question of anyone other than a qualified, experienced, professional financial or investment advisor (who does not sell annuities).

I would inject "tax".

A qualified, experienced tax professional.

Investment advisors can not practice in front of the IRS.

[retiredguy123]

Originally Posted by billthecpa

I find it mind-boggling that someone would ask this question of anyone other than a qualified, experienced, professional financial or investment advisor (who does not sell annuities).

The problem is that most financial "advisors" are not qualified to provide unbiased advice because they make most of their money on commissions. So, they have a built in conflict of interest. There are "fee only" advisors, but that is not the norm in the financial industry. Many people feel like they will not get their money's worth by paying a fee just for advice. Annuities are the most recommended product because they offer the highest commissions for an advisor.

[arbajeda]

GREAT ZOT!! Break down and talk to a real financial adviser! And not the one who stands to benefit from selling you something that will benefit him more than it does you! Or you can listen to that banker or whichever of these "experts" confuses you the least. But following the advice of either of them likely will put you in need of a proctologist to deal with the aftereffects.

[Aces4]

Originally Posted by HJBeck

Agree with this assessment.

Which assessment, there are pages of assessments here. When responding to a certain post, hit the “quote post” button first and it will bring the statement you agree with into your conversation. Hope this helps you, it will help us understand your comment.

[Aces4]

Originally Posted by BumpaOompa

Good God man! You’re all over the place here. Seek the advice of a qualified financial planner. A negligible cost considering the asset. If instead you prefer to take the guidance of strangers on an anonymous message board then I have a bridge for sale.

I beg to differ, first talk to a CPA for accurate tax consideration and then a fiduciary advisor. (I’d really buy the farm)

[Gigi3000]

Originally Posted by Mrprez

My financial advisor (who hates paying taxes) rolled my inherited annuity into an annuity at Lincoln Life. There were several options there. I have it setup to generate a monthly taxable income with a life insurance component for my wife or other beneficiaries.

I paid no tax on the rollover but I do pay income tax on the monthly income. I have been taking these distributions for two years now and there is more in the annuity than when I started.

Others may disagree, but for me this is perfect.

Would it be the Lincoln Advantage indexed variable annunity?

[Gigi3000]

Originally Posted by Boomer

Sloooooow down -- and take a deep breath. When coming into money, it is best to take your time and learn what you can. Never buy anything that you do not understand.

Of course, you are not going to take financial advice from a bunch of strangers on the internet. But, if I were you, I sure would not be taking advice from a bank advisor. Any advisor is in business to sell. They are not doing charity work. But I am particularly not a fan of bank advisors -- based on stories I have heard from others, including a couple of friends who worked at banks.

If I were you, I would first find a good CPA. (A couple of other posters here have said that, too.)

Your first issue is how to handle tax implications and how to minimize the hit. I think the SECURE Act (1/01/20) might have made some changes to the tax law as it affects inherited annuities. There could also be the possibility of a stretch to help with taxes.

I have done only cursory reading on the SECURE Act and on inherited annuities. But I am not in your situation. Give these things a Google. I think Kiplinger might have some good articles that are not too involved but can help you start to understand what you're in for.

Sometimes we have to get to the point of looking for answers by first understanding what our questions should be. Get yourself some of the vocabulary of taxes and find that CPA and learn what to do to be able to keep as much of your money as you can. You have a lot of things to figure out. If I were you, I would not buy into any investments right away. While it can be painful to sit on cash in the bank with hardly any interest, it can also let you sleep at night. (I give all investments the sleep test.)

Your idea of buying a small farm sounds like it could be something you have thought about for a long time. My assumption is that you are not thinking of a huge operation but of several acres, zoned agricultural, where you can pursue whatever it is you want to do on your very own land.

If that farm is your dream and you can make it work, there is nothing wrong with sitting on cash until you decide for sure what to do.

I am not a financial advisor, nor do I want or pretend to be.

But I have been at it for our own purposes, for a long time.

I do not pretend to always win or to be making a killing in the market. I never tell anyone else what stocks to buy.

My investment and tax vocabularies are limited to just the things I need to know. (Btw, Investopedia is a good online source for defining and explaining any investment terms you do not understand.)

I believe in keeping a moat of cash around stock investments.

I also believe that it is important to never get yourself into a position where you have to sell stock to pay taxes.

Do not let some "advisor" envelop you in smoke and mirrors language to try to make you feel like they know a whole lot of stuff that you don't. If you decide to go with an advisor, interview several. But, for now, think about finding a CPA and figure out what to do about the taxes. Then think and think and think and then proceed.

I wish you the best.

Boomer

PS: Advisors, for the most part, can now brag about big returns. This old bull market has been running for a looooong time. I think my dog could have been getting impressive returns for the past decade or more.

I've been advised of the Secure Act yep. Probably what I'll do is cash out and put the money toward the farm for my.kids to run while I romp in Florida in the winter . I know I'll pay $70000ish in taxes but property in Cental Ohio is booming and with Columbus growing so rapidly, it'll probably be my best bet. Then I'll heir it to them and feel better that they'll eat the rest of their lives them Armagendon comes .

[TNLAKEPANDA]

Originally Posted by Gigi3000

I'm 63, cost basis $160000, gain $200000. Bank advisor offered indexed variable annunity, 10 year spread. Anyone familiar with these? I have no experience with annunities. Trying to figure out whether to take lump sum and just pay the $70000 tax bill or do the annunity. If I take the annunity I'd put it into index mutual funds. My situation is very simple...I have no income, lots of savings, no mortgage on home, no tax deductions. If take annunity, goal.would be income I guess. Not taking social security, maybe take at 65.or wait until 70...

I would strongly suggest that you go talk to the folks at Parady Investments. They will give you good advice and no sales pressure! Don’t do anything until you have gotten solid advice.

[dewilson58]

Originally Posted by TNLAKEPANDA

I would strongly suggest that you go talk to the folks at Parady Investments. They will give you good advice and no sales pressure! Don’t do anything until you have gotten solid advice.

WOW.

[Gigi3000]

Originally Posted by Mohawksin

OP -- where did the money come from?. Did you inherit it? If so, the rules change and have not been mentioned. The question initially lies with a CPA in your state, then with a CFP.

It's a non spousal inherited annunity, not an IRA. A relative passed and.left it.to.me

[Boomer]

Originally Posted by Gigi3000

I've been advised of the Secure Act yep. Probably what I'll do is cash out and put the money toward the farm for my.kids to run while I romp in Florida in the winter . I know I'll pay $70000ish in taxes but property in Central Ohio is booming and with Columbus growing so rapidly, it'll probably be my best bet. Then I'll heir it to them and feel better that they'll eat the rest of their lives them Armagendon comes .

Aha! I know the territory of which you speak. It is that lovely, flat, green belt across the middle of Ohio with a good share of beautiful farmland.

It sounds like you are really liking the idea of owning a farm and played right, I think that might possibly have some tax advantages, too. (But I really don't know anything about how taxes and/or incentives can work for farms. But I am sure you can find out.)

I am not sure you are going to have to pay as much as $70,000ish in taxes. Like I said earlier, get a CPA who knows about this stuff. The annuity has your money imprisoned. You want to spring it. Find out the best plan for how to do that.

Happy growing -- whatever it is.

Boomer

PS: To my fellow Ohioan -- and don't fall for any of those investment guys who want to buy you dinner first.

[ML Smith]

Find a good investment/financial advisor and get a couple of opinions. Don’t necessarily take the first one. Compare and make your decisions from there.