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PDtax
PDtax, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 4625
Experience:  35 years tax experience, including four years at a Big 4 firm.
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I have a variable annuity that I was thinking about cashing

Customer Question

I have a variable annuity that I was thinking about cashing out.
The initial purchase price was $100,00.00 and currently the account value is around $110,000.00
What tax implications am I looking at if I were to decide to withdraw the entire amount?
I am currently out of the surrender charge period with the annuity company.
Submitted: 5 months ago.
Category: Tax
Expert:  PDtax replied 5 months ago.
Hi from just answer. I'mCustomer I can assist.
Expert:  PDtax replied 5 months ago.

Cashing an annuity out is the last in a long line of unpleasantness.

Any income earned above your purchase price and surrender charges is taxable as ordinary income. No capital gains treatment is allowed.

This assumes that you did not use tax advantaged funding, like in an IRA or other retirement account, which could be even worse.

Cash out your annuity, and never look back.

Thanks for asking at Just Answer. Please rate my response on our five star rating scale. I'mCustomer

Expert:  PDtax replied 5 months ago.
Customeragain.

Can i ask for positive feedback to close out your request?