Can an annuity help sidestep Social Security taxes?
February 19, 2019 by Lee Conrad
Our daily roundup of retirement news your clients may be thinking about.
Can an annuity help me sidestep Social Security taxes?
Annuitizing savings in a taxable account may not be a smart move for seniors who want to avoid the tax bite on their Social Security benefits, according to this opinion article on MarketWatch. Although the earnings in a deferred annuity will be tax-deferred and not included in their adjusted gross income, future withdrawals from the annuity could trigger a bigger tax bill than when the savings had stayed in the taxable account. That’s because the earnings, which are taxable, will have to be withdrawn before the principal, boosting the retirees’ combined income and consequently the portion of Social Security benefits to be subject to income taxes.
