[gpk111]

Retired guy: Transferring an annuity is done with a 1035 exchange. That exchange will carry the basis from the prior account. It's up to the owner to make sure that happened correctly. According to OP, the basis was identified, so no problem!?

[Gigi3000]

Originally Posted by CoachKandSportsguy

Although true, you are less likely to get an audit as long as you show reasonable taxable gains. And you only have to prove taxable gain basis if audited.

However, a CPA/Tax lawyer is your best source of tax minimizing choices, and that should be the next step after your decision to be sure that you get the most favorable tax treatment.

Depending upon the particulars of the situation, you have plenty of time to figure it out, but do the CPA tax lawyer NOW and don't wait until next year, as that is too late. . . as you will also want to make a quarterly payment after the distribution so that you don't get interest tacked on to your tax bill next year.

and its great to use this board to get generalized tax advice, but not at all good enough to file taxes properly for the particulars of your situation

LOL..right.im working on getting CPA now. I have a fee only CFP picked out, but they're hard to find. I feel more energized today

[Gigi3000]

Originally Posted by gpk111

Retired guy: Transferring an annuity is done with a 1035 exchange. That exchange will carry the basis from the prior account. It's up to the owner to make sure that happened correctly. According to OP, the basis was identified, so no problem!?

The bank said it had cost basis of $160000 and that usually no tax on that. Except if I go with the 5 year thing, if there's no exclusion ratio, I'd be taxed on the whole $360000.They're checking that now. If I'm taxed on the whole thing, then I'd do a lump sum

[gpk111]

Originally Posted by Gigi3000

The bank said it had cost basis of $160000 and that usually no tax on that. Except if I go with the 5 year thing, if there's no exclusion ratio, I'd be taxed on the whole $360000.They're checking that now. If I'm taxed on the whole thing, then I'd do a lump sum

No way anyone can tax you on the entire $360k. Please re-read my prior post differentiating non-taxable payouts from exclusion ratios. Sounds like the bank is pursuing the wrong question or they're miscommunicating to you.

Anxious to hear more!

[Boomer]

Gigi, I love this answer you gave for those who kept saying you should not be asking strangers on the internet for financial advice. . .

Originally Posted by Gigi3000

Because I'd like to not sound like a complete idiot when I talk to them. Sounding like an idiot anonymously is so much better

You are definitely not an idiot. Idiots do not ask questions. Idiots act like they know everything.

Of course, ‘anonymously’ is the operative word. You have been getting some decent information here that can help to equip you with a working vocabulary, along with your questions, for when you have those in-person conversations with those you need to talk to. (I do not think that bank advisor has your best interests in mind.)

If you and your accountant decide a stretch will work, another factor to consider is that you will reach Medicare age soon. When you are on Medicare, if you receive a big influx of income, it could raise your AGI to the number that causes IRMAA to kick in.

IRMAA is the acronym for Income-Related Monthly Adjustment Amount. If your AGI crosses the IRMAA threshold, two years after that, you will have to pay more for your Medicare Part B and/ or Part D for that year.

IRMAA is based on AGI, not taxable income, and it is an either/or scenario with no adjustment for how far in your AGI gets to triggering the increase.

This might not be significant in your situation, but you might want to ask the accountant to factor it in to find out. If taking the stretch, it could be worth adjusting the timeline. But it might not make a difference worth considering. Be aware, just in case. At least you would not be surprised if a premium increase shows up two years after an increase in AGI.

(IRMAA catches people sometimes who have to take a big chunk of change from their IRAs due to their RMD. Using a QCD as a part of the RMD can help in some situations. . .uh, oh, I digress. . .I do not know what in the hell is the matter with me. . .That was extraneous information. . .I cannot figure out why I like to talk about taxes???)

Anyway, I am happy to see that you are so much better ready to handle this. Anonymous questions can work out well. People who ask questions can be helped by getting answers to weigh and explore further. Those answers, sent anonymously from this end, are showing you what your further questions need to be.

(This really is an interesting thread, both about money and the psychology that can surround it.)

Boomer

[Two Bills]

Originally Posted by Boomer

Gigi, I love this answer you gave for those who kept saying you should not be asking strangers on the internet for financial advice. . .
You are definitely not an idiot. Idiots do not ask questions. Idiots act like they know everything.

Of course, ‘anonymously’ is the operative word. You have been getting some decent information here that can help to equip you with a working vocabulary, along with your questions, for when you have those in-person conversations with those you need to talk to. (I do not think that bank advisor has your best interests in mind.)

If you and your accountant decide a stretch will work, another factor to consider is that you will reach Medicare age soon. When you are on Medicare, if you receive a big influx of income, it could raise your AGI to the number that causes IRMAA to kick in.

IRMAA is the acronym for Income-Related Monthly Adjustment Amount. If your AGI crosses the IRMAA threshold, two years after that, you will have to pay more for your Medicare Part B and/ or Part D for that year.

IRMAA is based on AGI, not taxable income, and it is an either/or scenario with no adjustment for how far in your AGI gets to triggering the increase.

This might not be significant in your situation, but you might want to ask the accountant to factor it in to find out. If taking the stretch, it could be worth adjusting the timeline. But it might not make a difference worth considering. Be aware, just in case. At least you would not be surprised if a premium increase shows up two years after an increase in AGI.

(IRMAA catches people sometimes who have to take a big chunk of change from their IRAs due to their RMD. Using a QCD as a part of the RMD can help in some situations. . .uh, oh, I digress. . .I do not know what in the hell is the matter with me. . .That was extraneous information. . .I cannot figure out why I like to talk about taxes???)

Anyway, I am happy to see that you are so much better ready to handle this. Anonymous questions can work out well. People who ask questions can be helped by getting answers to weigh and explore further. Those answers, sent anonymously from this end, are showing you what your further questions need to be.

(This really is an interesting thread, both about money and the psychology that can surround it.)

Boomer

IRMMA's, RMD's, IRA's QCD's, AGI's!!
It's very complicated being an American with a few bob in the bank.
Much simpler here in UK.
We have it all in cash, hide it under the bed, and plead poverty!

[retiredguy123]

Originally Posted by gpk111

Retired guy: Transferring an annuity is done with a 1035 exchange. That exchange will carry the basis from the prior account. It's up to the owner to make sure that happened correctly. According to OP, the basis was identified, so no problem!?

I agree along as long the owner paid taxes on the $160,000 cost basis.

[retiredguy123]

Originally Posted by gpk111

No way anyone can tax you on the entire $360k. Please re-read my prior post differentiating non-taxable payouts from exclusion ratios. Sounds like the bank is pursuing the wrong question or they're miscommunicating to you.

Anxious to hear more!

I agree. If taxes were paid on the $160K, I don't think it matters whether you take a lump sum or over 5 years, you shouldn't owe taxes on money that has already been taxed.

I also agree that the bank advisor is either confused or not explaining the issue correctly.

[Stu from NYC]

Originally Posted by Two Bills

IRMMA's, RMD's, IRA's QCD's, AGI's!!
It's very complicated being an American with a few bob in the bank.
Much simpler here in UK.
We have it all in cash, hide it under the bed, and plead poverty!

Not a good idea hiding it under the bed, sometimes people look there. Better to hide it under the mattress.

[lindaelane]

Originally Posted by Gigi3000

My thoughts exactly. I'm hoping real estate prices will drop a little although Dave Ramsey says they won't.

OK, you respect Dave Ramsey.

He has financial advisors who work with him that you can work with. You could find them by using google I think.

Its find to listen to what your peers have to say - others, stop being mean to Gigi about this. In the end though, you will need a professional. Make sure they are a fiduciary.

It is very difficult to find a financial advisor who will recommend annuities along with other investments. Usually, if they recommend annuities that is all they recommend. That is because annuities are an insurance product. Licensing is different. You do not need to be a fiduciary to sell annuities, but of course you would refuse to work with any financial advisor who is not a fiduciary.

At any rate, Dave Ramsey is sensible and out to be able to help you find someone. Just try to find someone who can help you evaluate whether or not an annuity is right for you. They are right for some - the one I have is very, very right for me - so do not listen to those who tell you they are always bad. But they are very complex and it is difficult to find one that is right for you.

[CoachKandSportsguy]

Originally Posted by Stu from NYC

Not a good idea hiding it under the bed, sometimes people look there. Better to hide it under the mattress.

True story:

When had out lifestyle visit, we had no idea that we would be buying a house, and so the deposit was $10K, and we actually had $10K under our mattress back in New England, no $10K in any bank account which we could go to here in FL, and so it was a series of wire transfers from fidelity. . .

however, since we had never been to TV, we were unaware of the Fido branch here in TV, which would have made it a whole lot easier to put down the required amount.

but we made it in time

[Gigi3000]

Originally Posted by gpk111

No way anyone can tax you on the entire $360k. Please re-read my prior post differentiating non-taxable payouts from exclusion ratios. Sounds like the bank is pursuing the wrong question or they're miscommunicating to you.

Anxious to hear more!

Ok! Bank called. They were checking on the 5 year withdrawal.. There is no exclusion ratio. THIS time she said " that means you are paid out the gains FIRST, THEN the principal." So first 3 years or so I would have to pay taxes on all the full withdrawal(assuming equal amount withdrawals each year) then the last 2 years tax free. I swear she said earlier that I wouldn't get any tax benefit...
So I have CPA number so will get that set up...ty!!

[CoachKandSportsguy]

OK, now when you are meeting with the CPA, i want you to go through this thread with the CPA and have the CPA rate everyone's advice . . . on a scale from 1-3

3 - Could have been a CPA in a prior life
2 - Could be anybody who knows how to google
1 - You need to mute this person


Then you need to publish the rating, I want to know how Retiredguy123 was rated by the CPA. He has been on his financial planning game lately. . .



Finance guy

[Gigi3000]

Thanks everyone!!! Things are more clear now!!!!!!

[Gigi3000]

Originally Posted by CoachKandSportsguy

OK, now when you are meeting with the CPA, i want you to go through this thread with the CPA and have the CPA rate everyone's advice . . . on a scale from 1-3

3 - Could have been a CPA in a prior life
2 - Could be anybody who knows how to google
1 - You need to mute this person


Then you need to publish the rating, I want to know how Retiredguy123 was rated by the CPA. He has been on his financial planning game lately. . .



Finance guy

LOL....Will do!