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Ed Johnson
Ed Johnson, Tax Preparer
Category: Tax
Satisfied Customers: 10760
Experience:  GPHR Cert; U.S. Treasury Tax Advocacy Panel appointee
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I have just discovered that the only option ...

Resolved Question:

I have just discovered that the only option on my mother''s annuity was taking the death benefit, and now I am on the hook for the taxes. Is there a way that I can shelter it to avoid the taxes at this time? I know this was not my mothers intent, just wanted to know if there are options, or just have to bite the bullet here.
Submitted: 8 years ago.
Category: Tax
Expert:  Ed Johnson replied 8 years ago.

Dear tms,

Your broker is correct. Because you have already taken the benefit there is no way to shield it or reduce the tax exposure.

Done before hand,the annuity could have been set up a number of ways to reduce the tax exposure. You can not avoid the tax altogether; but for example: it could have passed to a special needs trust to which you were the custodian and executor. You could then withdraw as you needed to and pay taxes on the amount of withdrawal.

But, since you have aleady cashed this in, there is no such opportunity.



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