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Rakhi Vasavada
Rakhi Vasavada, Financial and Legal Consultant
Category: Finance
Satisfied Customers: 3824
Experience:  Graduated in law with Emphasis on Finance and have have been working in financial sector for over 12 Years
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I am 63 years old. Divorced. My Annuity is dwindling quickly

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I am 63 years old. Divorced. My Annuity is dwindling quickly with the stock market slow down. Unemployed. I have been drawing from the annuity for 7 years. Recently went from $1200/month to $500/month so I could still qualify for health insurance with the county. Applied early for Social Security at 62 and receive $700/month. I have worked and gone to school and completed my externship for school in allied health care. Unfortunately, my health has gotten pretty bad over the last 2 years. I have not applied for assistance because I thought I would eventually be able to work again. My Annuity will be 7 years old in March 2012. At that time I would not have to pay a penalty to withdraw what's left $93,000.00. If I withdraw now it will cost $1600.00. I want to know what will happen to me tax - wise if I withdraw the money. Do I need to put the cash in another type of retirement fund? The money I have invested was a divorce settlement. So I am only to pay taxes on the earned income each year as it is now. What can I expect to be taxed if I leave the Annuity fund. I am losing money every day fast with the market's downturn. My account has dropped about $15,000.00 in the last 2 or 3 weeks. Please advise me how to survive these financial woes. Thank you, Martha
Submitted: 2 years ago.
Category: Finance
Expert:  Rakhi Vasavada replied 2 years ago.

Dear Madam,

 

First of all, since you are over 59 1/2, you will not be subjected to 10% penalty. However, annuities, being tax deferred, will be subject to income tax when you withdraw.

 

If what you have is variable Annuity and if it its rolled over to IRA, no taxes will be there. I am assuming this is an IRA variable annuity. If it is NOT an IRA variable annuity then it cannot go into a traditional IRA. It would then have to be a 1035 exchange, which is not taxable either, and you can choose a low cost provider such as Jefferson National or even Ohio National, Nationwide, Prudential or a variety of other firms.

 

Also see if you can get any assistance as you may not be able to work in near future.

 

I hope this helps...

Warm Regards,

Rakhi Vasavada, Financial and Legal Consultant
Category: Finance
Satisfied Customers: 3824
Experience: Graduated in law with Emphasis on Finance and have have been working in financial sector for over 12 Years
Rakhi Vasavada and 6 other Finance Specialists are ready to help you
Customer: replied 2 years ago.
will I have a monthly income from the new investment? Should I invest the whole amount withdrawn from the annuity?
Expert:  Rakhi Vasavada replied 2 years ago.

Dear Sir,

 

Yes, you can have monthly income from this new investments. For this, you will have to plan your investments. If you intend to receive monthly income from your IRA account, and you do not wish to deplete your capital, you should invest in securities that generate income, such as bonds or stocks that pay dividends. While you can sell other securities to make your withdrawals, you will be diminishing your account value. An income-generating security can remain in the account while you simply withdraw the income.

 

You may also choose to implement an automatic withdrawal program. Your IRA trustee or custodian will be able to set up a plan that sends you monthly checks out of your IRA, or transfers the funds automatically to your bank (or other) account. You will have to sign an IRA distribution form to initiate the program. Usually, you can set up a program that distributes either the income generated in the account, or a flat, specified sum.

 

I hope his helps.. Wish you good luck...

 

Warm Regards,

Rakhi Vasavada, Financial and Legal Consultant
Category: Finance
Satisfied Customers: 3824
Experience: Graduated in law with Emphasis on Finance and have have been working in financial sector for over 12 Years
Rakhi Vasavada and 6 other Finance Specialists are ready to help you

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