How to Decipher an Annuity Statement

Annuities can be hard to understand. Sensible Money's Founder and CEO, Dana Anspach, explains how to know what you looking at in this video.

[@davidjohn4326]

Excellent explanation on how to examine annuity contracts..

[@michaeleldridge5640]

Nice. I new they were scams but didn't have proof till now. Thank you. Basically only get an income annuity when you are ready to receive income.

[@craigbutcher8079]

One thing that seemed odd was she said a non-qualified annuity outside the IRA (i.e, purchased with non pretax money) had a withdrawal penalty before 59-1/2 if they turned on the income rider. That doesn't seem correct. Also a question I have about RMD's. Presumably the lifetime payout on an income rider of this kind from a non-annuitized Annuity purchased with IRA (pretax) money would have to satisfy the RMD but the RMD would be calculated on what? The FMV would be on the value account (wallet A) as of December of previous year? Would that amount be the wallet A account value less any applicable surrender charges?

[@leeward1717]

What day/time will you be speaking at the Bogleheads conference?

[@Sensiblemoney]

As far as I know (Dana here) they haven't finalized the agenda. You can keep up to date on it here: boglecenter.net/2023conference/

[@robertpellechio6642]

If a lump sum withdrawn is taken, how is it taxed?

[@Sensiblemoney]

If it is a non-qualfied annuity (not an IRA, 403b Roth, etc.), gain is considered to be withdrawn first and is taxed at ordinary income rates. Example: You put $10,000 into an annuity. It grows to $11,000. You withdraw $500. All $500 taxed as ordinary income. If you withdraw $1,500, $1,000 is taxed at ordinary income and $500 is not taxed as it is a return of your cost basis. If you are under age 59 1/2, any gain withdrawn will also be subject to a 10% early withdrawal penalty tax. If it is a qualified annuity (in an IRA, 403b, Roth) then the tax rules that apply to that account type will determine how a withdrawal is taxed.