Life Insurance and Annuity

Although tax exempt income is included in calculating your provisional income, a tax deferred Annuity can help reduce taxes on your Senior benefits. Income that is left to accumulate inside a tax deferred annuity does not appear on your tax return and is not used in calculating your total income.

Therefore, moving money from a taxable investment to a tax deferred annuity can help reduce taxes on Senior benefits. You can possibly pay no tax at all on your Senior benefits if you shelter enough income inside a tax deferred annuity and your other income is below the base amount threshold. If your investments are generating taxable income, that income is counted when determining how much of your Senior benefits are taxed. Earnings that grow tax deferred inside an annuity are not counted toward your provisional income.

Annuity earnings will become taxable income when you withdraw them. Make sure you don’t immediately need the income before moving to a tax deferred annuity. Withdrawals in the early years could also incur surrender penalties.If you would like more understanding on how to help reduce taxes on your Senior benefits, please contact us at your convenience.