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TaxRobin
TaxRobin, Senior Advisor
Category: Finance
Satisfied Customers: 15732
Experience:  15 years of experience in financial advising with emphasis on tax issues.
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I am 59.5 years old, woman, I have saving about 1,000,000

Customer Question

I am 59.5 years old, woman, I have saving about 1,000,000 and retirement 1,000,000, that is the only I have. What is the best to live on?Low risk, annuity?
Submitted: 9 months ago.
Category: Finance
Expert:  TaxRobin replied 9 months ago.

Hello, I'm Robin. Welcome to JustAnswer. I'm reviewing your question now and typing up my reply. I'll post that in just a few moments.

Expert:  TaxRobin replied 9 months ago.

If you take out of the annuity you will pay tax on the amount that represents earnings. The portion that is your investment is not taxed but the annuity splits a portion fo the distribution between taxable and return of investment.

Your savings are not taxable when you take them out (you already pay tax each year on any interest you earn).

Your choice depends on if you want to pay tax on the distribution.

A positive 5 star rating is appreciated so I get credit for the response.

Customer: replied 9 months ago.
Means if you put both retirement and saving to annuity, pay tax both.
If you put only retirement to annuity, pay tax same amount if you use it now after age 59.5?
Expert:  TaxRobin replied 9 months ago.

If you take money out of an annuity, you pay tax on the amount that represents the earnings. If you take out at 59 1/2 or older you still pay income tax on the earnings. The only difference in being 59 1/2 is that you do not pay the additional penalty for an early withdrawal.